Microsoft Acquires SwiftKey, Bets On AI-Powered Apps

  • Microsoft has acquired SwiftKey, maker of a predictive software keyboard powered by AI technology.
  • The SwiftKey keyboard features the first neural network language model implemented in a smartphone.
  • Hundreds of millions of people around the world and many of the leading mobile manufacturers rely on SwiftKey's language prediction technology.
  • Besides owning a successful technology, Microsoft wants to position itself in the race to AI.

Microsoft (NASDAQ:MSFT) has acquired SwiftKey, maker of a predictive software keyboard powered by Artificial Intelligence (AI) technology that is installed on hundreds of millions of smartphones.

The SwiftKey keyboard uses a blend of AI methods to learn the user's typing style and predict the next word the user intends to type, based on currently input text and what it has learned from previous inputs and interactions with the user. SwiftKey, available in Android and iOS apps, is more than a simple productivity app. It features the first neural network language model implemented in a smartphone soft keyboard and uses neural networks to emulate the human brain while processing lots of data to help better suggest upcoming words.

SwiftKey, founded in 2008, is based in London with offices in San Francisco, US, and Seoul, South Korea. In 2013, the company received a series B finance round totaling $17.5 million that was led by Index Ventures along with Octopus Investments and Accel Partners. Microsoft reportedly paid $250 million for the acquisition.

"Hundreds of millions of people around the world, and many of the leading mobile manufacturers rely on our language prediction technology," said SwiftKey co-founders Jon Reynolds and Ben Medlock in the SwiftKey communication. "Our users have saved an estimated 10 trillion keystrokes across 100 different languages, which adds up to over 100,000 years of reclaimed typing time."

The SwiftKey team will join Microsoft Research to work under Harry Shum, Microsoft Executive VP for Technology and Research. The SwiftKey keyboard is currently available only for Android and iOS, and porting it to Microsoft's operating systems is likely to be among the new priorities after the acquisition. The company has stated that the Android and iOS apps will continue to be freely available.

"Our number one focus has always been to build the best possible products for our users," said Reynolds and Medlock. "This will not change. Our apps will continue to be available on Android and iOS, for free. We are as committed as ever to improving them in new and innovative ways."

"In this cloud-first, mobile-first world, SwiftKey’s technology aligns with our vision for more personal computing experiences that anticipates our needs versus responding to our commands, and directly supports our ambition to reinvent productivity by leveraging the intelligent cloud," said Shum in the Microsoft communication.

The intelligent cloud, which will offer advanced AI capabilities in the cloud, is an important part of Microsoft's strategy. Recently, the software giant acquired Metanautix, a company specialized in data management for business analytics, whose technology will be integrated with Microsoft's Azure cloud platform.

"We’ll continue to develop SwiftKey’s market-leading keyboard apps for Android and iOS as well as explore scenarios for the integration of the core technology across the breadth of our product and services portfolio," added Shum. "Moreover, SwiftKey’s predictive technology aligns with Microsoft’s investments and ambition to develop intelligent systems that can work more on the user’s behalf and under their control."

The acquisition fits in Microsoft's business focus on productivity apps and cloud computing. But the acquisition should also be placed in a wider context. Financial Times notes that SwiftKey is the latest in a string of startups with advanced AI technology to be acquired by a Silicon Valley tech giant in the ongoing war for AI talent. Re/Code notes that Microsoft's move has less to do with the mechanics of entering text on a touchscreen and everything to do with AI.

It's worth noting that SwiftKey’s technology also powers the computer attached to renowned scientist Stephen Hawking’s wheelchair, for which the company developed a special language model to assist him in speaking and writing his lectures and articles. Along with other technology experts and public figures including Tesla Motor's founder Elon Musk, Hawking has argued that advanced AI is likely to have a disruptive impact, with huge opportunities and risks.

SwiftKey was also targeted by Facebook (NASDAQ:FB), as reported by Forbes. Facebook - a company which places enormous importance on deep learning AI - is becoming one of the most advanced AI research centers in the world, and Facebook's AI developments have accelerated to the point that AI will surely shape the way humans interact with computers.

Other top tech giants are spending billions on neural networks, machine learning, and other AI endeavors. IBM (NYSE:IBM) recently expanded its AI platform Watson with new AI tools in the Watson Developer Cloud. Alphabet Inc-A (NASDAQ:GOOGL) recently claimed a major AI breakthrough with its AlphaGo program that defeated a top human Go player - a breakthrough according to many AI experts. According to the company, products and services powered by AlphaGo technology could begin to appear in one to two years and include sophisticated smartphone-based intelligent personal assistants.

Alphabet's breakthrough was achieved by by Alphabet's company Google DeepMind, founded in 2010 in the UK as DeepMind Technologies and acquired by Google in 2014. Other small research companies with promising AI technologies are likely to be on the acquisition target list one or another tech giant.

It appears that Microsoft fully realizes the enormous importance and disruptive potential of advanced AI. Microsoft is joining the small and select club of tech giants engaged at the forefront of AI, which includes Facebook, IBM, and Alphabet, with a sensible business strategy. The long term impact on Microsoft stock is likely to be positive.

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