Microsoft is said to be purchasing London-based startup SwiftKey, a company that uses artificial intelligence in the creation of its predictive smartphone keyboard.
The companies are said to have been involved in discussions for months, as Microsoft aimed to acquire one of the most popular keyboard apps available for the iOS and Android operating systems.
According to a report by the Financial Times, the price of the acquisition is about $250 million, with TechCrunch stating that investor sources say the transaction is an all-cash one. In addition, Microsoft's purchase of SwiftKey is a done deal, and that it will be officially announced very soon.
The acquisition could be a head-scratcher at first glance, as Microsoft already has a predictive keyboard that has also been successful on various platforms including iOS, Android and BlackBerry. However, the reason for the purchase is seemingly deeper than SwiftKey's keyboard.
The keyboard and SDK of SwiftKey has been downloaded in over 500 million iOS and Android smartphones, with the app's technology provides ample time savings to its users. The AI-based platform used by SwiftKey could have wider applications for Microsoft though, as the predictive engine the app can be used in many more ways aside from smartphone keyboards.
The AI algorithm being applied by the current versions of SwiftKey is named the "n-gram" database, and it is able to monitor the input of users and then apply a word sequence model to be able to provide personalized predictions for the next word that users would type. This system has much higher accuracy compared to other predictive keyboard apps which base suggestions on low-level pattern recognition systems that are operated on static databases.
"There's a war for talent in artificial intelligence - and companies like Google and Microsoft recognize the best talent is in the UK," said a source.
SwiftKey previously shifted its business model from selling the app to offering in-app purchases for new themes. The move may not have created as much financial success as the startup would have hoped, suggested the Financial Times.
In December 2015, SwiftKey just released a symbol-based communication app to help people that are not able to communicate verbally. Named SwiftKey Symbols, the app is also powered by SwiftKey's contextual prediction technology.