The $19.7BN acquisition of speech-to-text specialist Nuance by Microsoft, announced earlier this year, has attracted the attention of the UK’s active antitrust watchdog — which said today it’s taking a first look to assess whether there are reasons to be concerned about the proposed deal.
A decision on whether the Competition and Markets Authority (CMA) will open a phase 1 investigation will follow in due course.
Currently, there’s no stated timeframe for the regulator to take a decision on that — but a consultation period in which the CMA is inviting interested parties to comment runs until January 10, 2022.
Antitrust oversight of proposed acquisitions can stretch to many months — and can, at the least, lead to major delays to clearing transactions.
In a statement on the development, the CMA said it is “considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services”.
At the time Microsoft announced the Nuance acquisition, back in April, the software giant said it was buying the speech-to-text firm in order to strengthen its presence in the healthcare vertical — where Nuance has developed a number of clinician-support products (such as tech for documenting telehealth visits; a speech recognition tool for clinical documentation; and AI-powered radiology reporting, among other software tools).
The UK’s antitrust regulator may decide the planned acquisition merits further scrutiny — at which point it would open a phase 1 investigation. If after that it decides there is still reason to be concerned it may open a deeper, phase 2 probe.
It may also decide during one of the stages of its process that there are no competition issues of concern and clear the acquisition.
Whereas, on the flip side, if it has concerns it could decide remedies are required before it can go ahead or even order the transition blocked.
Microsoft has been contacted for comment on the CMA’s preliminary probe of its planned purchase of Nuance.
Healthcare has been a vertical of growing interest to tech giants for a number of years — with the likes of Amazon, Apple, Google, Microsoft and even Facebook all taking an interest in building tools for tracking, monitoring or otherwise supporting health — raising concerns that their ambitions in such a sensitive area will further entrench their dominance and market power as a vital sector steps up digitization.
The UK, meanwhile, is in the process of retooling domestic competition law to take account of platform power — and has said it will be bringing in a “pro-competition” regime which it wants to protect smaller innovators from the market muscle of tech giants.
Ahead of legislation to empower a new Digital Markets Unit, which sits inside the CMA, to oversee big tech the competition watchdog continues to scrutinize M&A activity and other major moves (such as Google’s strategic ‘Privacy Sandbox’ plan).
Most recently, the regulator ordered Meta (aka Facebook) to undo a completed acquisition of animated GIF platform Giphy — a notable development in competition oversight given how few big tech M&As have been challenged, historically — underscoring how the CMA is at the forefront of challenging platform power and ambition (even when — in that instance — the order requires a messy transaction reversal).