One antitrust probe down, one more to go.
A month after the European Commission opened an investigation into Microsoft’s proposed acquisition of transcription software developer Nuance Communications, the EU’s competition bureau determined that the $19.7 billion business combination wouldn’t pose a threat to antitrust regulations and doled out an unconditional all-clear to the transaction.
Regulators began looking into the purchase in November, after the companies submitted their proposal for review. At the time, per Reuters, EU authorities sent out questionnaires to clients and competitors of Microsoft and Nuance to ask whether they viewed the two companies as competitors and if they believed the merger would negatively impact their own businesses.
Once the preliminary probe had been launched, officials had until Dec. 21 to either extend the investigation or sign off on the acquisition. They ultimately settled on the latter, noting in a statement on Tuesday that “the commission found that the transaction, as notified, would not significantly reduce competition in the transcription software, cloud services, enterprise communication services, customer relationship management, productivity software and PC operating systems markets.”
The investigation focused on a handful of core concerns. The first of these, according to the statement, was the potential overlap between transcription software offered by both Nuance and Microsoft, though regulators concluded that Nuance’s out-of-the-box products—used largely by hospitals and other healthcare clients—are “very different” from the speech recognition capabilities available to users of Microsoft’s Azure Cognitive Services.
They also surmised that while Microsoft and Nuance’s offerings will slot nicely together, that compatibility won’t keep other transcription software providers from accessing Microsoft’s cloud computing services if needed, nor will it completely box out the companies’ competitors from the transcription software, enterprise communication services, customer relationship management software, productivity software and PC operating system markets.
Rather, the regulators noted, “The combined entity will continue to face strong competition from other players.”
Finally, they looked at the implications of Microsoft’s having access to data collected and transcribed by Nuance. Amid worries that the data could be used for other purposes to give Microsoft a leg up over its competitors, the investigators concluded that not only would legal and contractual restrictions protect the data from such unauthorized use, but the fragmented speech data collected by Nuance—compared to the fully transcribed information that’s securely transferred to and stored in clients’ own databases and electronic health records—also wouldn’t be of any real use.
Still, even as the EU closes its examination of the deal—and with previous sign-offs from trust-busters in the U.S. and Australia already under its belt—Microsoft and Nuance are still under the U.K.’s microscope.
Earlier this month, the U.K.’s Competition and Markets Authority opened an investigation of its own into the acquisition’s potential anti-competitive effects. The authority is inviting public comments on the deal through Jan. 10, though the probe doesn’t have an official deadline, potentially pushing the transaction’s close well past Microsoft and Nuance’s proposed late 2021-to-early 2022 timeframe.