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Why Microsoft spent $20 billion on Nuance


Good morning! This Tuesday, why Microsoft spent huge to buy Nuance, how Salesforce is planning to reopen its Bay Area offices next month, Tim Cook takes another shot at Facebook, and tech execs play the chip-shortage blame game.

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The Big Story

Why Microsoft wanted Nuance

Everyone assumed Apple would eventually buy Nuance. But instead, Microsoft snapped up the pioneering AI company for $19.7 billion. That's Microsoft's second-largest acquisition ever, by the way, behind only the $26 billion it dropped on LinkedIn.

Microsoft said the deal was all about health carewhen it announced the acquisition, which makes sense. Health care is a huge, hard-to-crack market, and one where Nuance has been hugely successful.

  • Nuance's best products are things like Dragon Medical One, which lets medics do paperwork with their voice. Microsoft said Nuance products are used in 77% of U.S. hospitals. Buying Nuance is an expensive customer-acquisition move, but probably a very effective one.
  • Microsoft Cloud for Healthcare is a big part of the company's industry cloud strategy, and Microsoft's whole thing is using tech to make people more productive. Nuance is a round peg in a round hole here.

But Microsoft isn't paying $20 billion for a health care voice assistant. And in a way, Nuance's strengths map directly to a future Microsoft has struggled to figure out.

  • Think about Cortana: Microsoft wanted it to be an omnipresent, friendly assistant to help with everything from scheduling meetings to sending messages to telling you the weather. But over time, it has shifted to being more like Clippy 2.0: a productivity assistant.
  • Here's what Microsoft's Andrew Shuman told The Verge in 2019: "I think that what we've been really working on over the last year is how we can better embed Cortana across Microsoft 365 experiences and really delight users, especially those users who really are on board, so we have to understand their calendar, their tasks, their work documents, their interfacing with their close collaborators."
  • That's what Nuance is good at: designing industry- and product-specific systems that make it easy to do work with an AI assistant. Microsoft is done trying to beat Alexa and Google Assistant as general virtual helpers, but Nuance offers a shortcut to getting there for enterprises.
  • In the long run, $20 billion to bring a paperless, paperwork-less future to businesses everywhere would be a pretty good deal.

Microsoft is on a bit of a deal-making roll right now. As its stock price continues to climb — and while it avoids the antitrust scrutiny facing its largest competitors — Microsoft is clearly feeling spendy. It wanted TikTok; it's still in negotiations with Discord; it only just recently closed the $7.6 billion deal for ZeniMax. It's making some of the splashiest deals in tech right now, and it'll be interesting to see what comes next.

Oh, and some good news for Team Nuance: Reid Hoffman told CNBC yesterday that "one of the things I learned on the LinkedIn side is how good Satya and his team are at actually integrating companies, both operationally and culturally."


Salesforce's back-to-work blueprint

Anna Kramer writes: The doors of Salesforce Tower will be swishing open once more. There's just one catch: You have to be vaccinated to enter. Salesforce became the first company to tie reopening to vaccinations when it announced its return to work plan yesterday, offering up a "volunteer" return-to-office option for Bay Area employees who've been vaccinated. (That's one way to avoid the "vaccine mandate" arguments, I guess.)

  • Employees in San Francisco, Palo Alto and Irvine will be allowed to return to the office in May if they're vaccinated. That will be followed by a gradual expansion in reopening from 20% to 75% capacity to all employees — regardless of vaccination — depending on local health data and guidance.
  • But unlike Google, which has set a pretty strict return-to-work policy beginning in December, Salesforce workers will be able to opt for remote work through the end of 2021, regardless of whether their office is open.

Salesforce is trying hard to be a leader in helping companies return to the office, and the company said it has already learned some big things about post-pandemic work.

  • For instance: Salesforce offices in Australia have been open for hybrid work since August 2020, and workers there have chosen to come into the office more on Wednesdays and Thursdays, instead of Monday.
  • People are also opting for co-working spaces much more than individual desks, according to Salesforce's research. The trend seems to be clear: Solo work will get done at home, and group work in the office.
  • Every company is about to get a lot of this kind of data, as they experiment with new ways of working. How you measure things — and what you do with the data — is going to be crucial.


The pandemic upended life as we knew it. Most of us experienced the abrupt shift in the way we work, learn and connect, with blurring lines between office and home. While the future of work continues to evolve, the focus on a more engaged and fulfilled workforce will outlast the pandemic.

Learn more

People Are Talking

Apple is one step ahead of the U.S. privacy regulators, Tim Cook said:

  • "I think people will stop and pause for a minute and see what we're doing and it's not something that you would say, 'Wow that's really wild.' It's something you would probably look at and say, 'That's pretty reasonable.' And I think the regulation will eventually catch up."

Cook also took a shot at Epic's lawsuit:

  • "They'd like developers to each put in their own payment information. But that would make the App Store a flea market and you know the confidence level you have at the flea market."

After the semiconductor shortage summit with the White House, Intel's Pat Gelsinger said the country needs to act fast:

  • "Can I fix the industry, absolutely not. You know these are much larger than we can do ourselves. But if we start, I'll say, surgically picking some of the key shortages, working with the key suppliers with them on our capacity … we believe that we can start helping in as little as six to nine months."

And the shortage is all America's fault, Huawei's Eric Xu said:

  • "The U.S. sanctions is the main reason why we are seeing panic stockpiling of major companies around the world. Some of them never stockpiled anything but because of the sanctions they are now having three months or six months of stockpiles."

The Free Software Foundation said Richard Stallman is staying on the board:

  • "While his personal style remains troubling for some, a majority of the board feel his behavior has moderated and believe that his thinking strengthens the work of the FSF in pursuit of its mission."

Larry Ellison told his staff that he bought and plans to tear down an $80 million home in Palm Beach (weird!) but he's not moving to Florida:

  • "Last year I moved from California to the island of Lana'i and became a resident of the State of Hawaii. I love it here and have no plans to move back to Florida, Texas, back to California ... or anywhere else."

Making Moves

Grab is getting SPAC'd, merging with Altimeter Growth Corp. in a deal that values the ride-sharing company at $39.6 billion. That's the biggest SPAC deal yet, by the way.

On Protocol | China : Ant Group is restructuring, after increased pressure from regulators and a failed IPO last fall.

Darktrace is planning to go public in London, The Wall Street Journal reported, hoping to be valued as high as $4 billion.

Twitter is building a team in Ghana, and is hiring on "several teams including product, design, engineering, marketing and communications."

In Other News

  • On Protocol | Enterprise: Meet Kyndryl, the new name for IBM's managed infrastructure services business. Cue the jokes.
  • The Internet of Things has a new security risk. Researchers discovered a set of vulnerabilities now known as Name:Wreck, which could expose up to 100 million IoT devices.
  • Nvidia's taking another stab at challenging Intel. It announced Grace, its second major attempt at building a high-performance CPU for data centers. The chips are based on Arm designs, which I'm sure won't raise any regulators' eyebrows at all.
  • Intel wants to help end the chip shortage. Pat Gelsinger said the company's looking at building auto chips in its own factories, and could be up and running within six months.
  • Uber's bouncing back, with bookings across rides and food delivery reaching their highest level ever last month. Meanwhile, Dara Khosrowshahi's thinking about cannabis delivery, and Intel's Mobileye claimed it will have a fully driverless delivery service in 2023.
  • On Protocol: Schools are trying to close the homework gap. New E-rate funding could help — but it depends on what the money's allowed to be used for.

One More Thing

(Mostly) autonomous pizza delivery

A fun thing about autonomous vehicles is that when it comes to moving things like food and packages, it's often not the "driving to a place" that's the hard part. It's the "What happens when it gets there?" that's tough. Should the car drive into your living room? Whip the package at your door with a catapult? Domino's, ever the innovator, is going a little more conservative with a pilot test in Houston: You'll have to go outside to get your pizza, and plug in a PIN code to unlock the Nuro vehicle. So it's autonomous delivery, but only does 95% of the job? Definitely not tipping for that.


Companies all over the tech industry are making big promises and big plans for the coming decades, trying to do their part to fight climate change, promote equality and take a view of success longer than next quarter and wider than Wall Street. Our panel of industry leaders will examine these questions and more.


Today's Source Code was written by David Pierce, with help from Anna Kramer and Shakeel Hashim. Thoughts, questions, tips? Send them to, or our tips line, Enjoy your day; see you tomorrow.

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