Microsoft has announced a “definitive agreement” to acquire artificial intelligence (AI) speech recognition firm Nuance Communications for $19.7 billion (£14.3 billion).

The deal is intended to close later in the year with Nuance boss Mark Benjamin remaining as CEO but reporting to Microsoft’s executive vice president of Cloud & AI, Scott Guthrie.

Nuance is an American AI firm based just outside of Boston that sells audio recognition and transcription tools. The company was founded in 1992, has over 7,000 employees and reported $346 million in fourth-quarter revenues. It’s thought that Microsoft is attempting to expand via acquisitions, with an interest in Nuance’s work in healthcare, customer services and voicemail. 

Microsoft and Nuance already have a professional relationship, collaborating on technologies that allow doctors to capture voice conversations and enter them into electronic medical records.

This will be Microsoft’s immediate focus once the deal closes, with the company saying that by augmenting the Microsoft Cloud for Healthcare with Nuance’s solutions, it will be better able to empower healthcare providers through the power of ambient clinical intelligence and other Microsoft cloud services. 

“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” said Microsoft CEO Satya Nadella.

“AI is technology’s most important priority, and healthcare is its most urgent application. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud for Healthcare and Nuance.”

Nuance also specialises in AI, speech recognition and virtual assistants, areas in which Microsoft already has extensive expertise with its developer tools that enable transcription and functions to incorporate speech recognition into its products. Both Teams and the Bing search engine have some forms of speech recognition and audio transcription, for example.

The tech giant is seemingly in takeover mode with a $7.5 billion deal for video game maker Zenimax completed last month and wide reports that it recently considered buying social media app TikTok. The firm was also said to be chasing an acquisition of gaming chat app Discord, for around $10 billion. 

Both Discord and TikTok deals were thought to be more about the large volumes of users data that Microsoft would have access to if the acquisitions were successful. The deal for Nuance is Microsoft’s biggest acquisition since buying LinkedIn in 2016.