Microsoft Corporation - Nuance Communications Inc.

Summary

Microsoft Corporation (Microsoft) proposes to acquire Nuance Communications, Inc. (Nuance).

Both parties supply digital software to healthcare and enterprise customers. Microsoft supplies a range of products in the digital productivity, intelligent cloud and personal computing segments and Nuance provides speech recognition, transcription and digital customer engagement products in Australia.

Market definition

The ACCC mainly considered the effect of the proposed acquisition on the primary markets that Nuance serves, being the supply of:

• transcription software to healthcare customers; and
• customer engagement solutions, including digital engagement, voice engagement and voice biometrics solutions.

The ACCC also considered potential impacts of the proposed acquisition on competition in the supply of the various software suites and services that Microsoft supplies, including customer relationship management, cloud computing, videoconferencing and others.

The ACCC did not reach a concluded view on market definition as it was not necessary for the competition assessment.

Competition analysis

The ACCC concluded that the proposed acquisition is unlikely to have the effect or likely effect of substantially lessening competition.

Healthcare transcription software

While Nuance is the leading provider of this software, the ACCC found that Microsoft does not currently compete in this market, and appears unlikely to become a strong future competitor to Nuance. In addition, the ACCC found there are alternative competitors and overseas companies that may enter the Australian market in the future.

Customer engagement solutions

The ACCC determined that there are a number of alternative providers to Nuance in the supply of each of digital engagement, voice engagement and voice biometrics. Microsoft does not offer any end-user products in these markets, and does not compete closely with Nuance.

Vertical and conglomerate effects

The ACCC found that Microsoft would not have an incentive to restrict or degrade access to its suite of technology services post-acquisition. Nuance’s competitors can switch to a number of alternative providers in customer relationship management, cloud services, internet browsing and videoconferencing software. While Microsoft is a market leader in personal productivity software, Nuance’s competitors do not rely on integration with Microsoft’s Office products to compete effectively.

The ACCC also found that Microsoft would not have an incentive to restrict or degrade access to Nuance’s products, because potential customers of Microsoft’s competitors would not consider integration with Nuance an important offering.