The EU is investigating if the proposed acquisition of Nuance by Microsoft would harm competition in Europe
EU opens investigation into Microsoft's $16 billion acquisition of Nuance
December 13, 2021
by John R. Fischer, Senior Reporter
Microsoft’s $16 billion acquisition of Nuance Communications has hit another roadblock, this time in Europe.
The EU antitrust regulator has asked customers and competitors to write up concerns in a questionnaire that includes questions on whether they see both companies as competitors and if the acquisitions would negatively impact their own businesses, according to Reuters.
Compared to minimal reviews performed by the U.S. Department of Justice in June and the Australian Competition Commission in October, the EU’s probe is the most extensive one carried out around the deal by an antitrust authority. Both companies filed for approval from the European Commission’s competition bureau last month, and the regulator has until December 21 to approve the deal or launch a deeper investigation.
Proposed in April, the acquisition would allow Microsoft to integrate Nuance’s speech and conversation AI software into the Microsoft Cloud for Healthcare. Used to automate note transcriptions for doctors, the technology is expected to accelerate the adoption of cloud-based AI tools for healthcare providers.
As part of the deal, Microsoft would pay $56 in cash per share of Nuance and assume Nuance’s debt, bringing the total value of the deal to $19.7 billion and making it the largest acquisition the company has made in years. While initially expecting to close the deal by the end of this year, the companies announced last month that they were pushing the timeline back to somewhere between the final quarter of 2021 and the first quarter of 2022.
Nuance says it currently serves 77% of U.S. hospitals. In any of its deals, it can use customer data to advance its voice recognition systems. Since big cloud vendors do not have unrestrained access to customers’ data for research and development, acquiring Nuance offers Microsoft a unique opportunity but is a concern to some.
Additional potential concerns may include the fact that Microsoft could force its Office suite on Nuance customers if it were to package them together, said Steven Weber, a University of California Berkeley professor studying the intersection of technology and health care, in an interview with Reuters.
Until now, Microsoft has been able to avoid antitrust lawsuits and investigations over the last decade, unlike competitors like Alphabet Inc.’s Google, Facebook, Apple and Amazon. In addition to big tech companies, high up companies in the healthcare industry have also faced pushback from regulators around potential deals.
Following months of investigating, the European Commission earlier this year gave Siemens Healthineers the nod to proceed with its $16.4 billion acquisition of Varian Medical Systems. The deal was announced in August 2020 and completed in April this year, and marked Siemens’ return to the radiotherapy market after a decade-long absence.
The Commission launched its investigation out of concern that the deal would cause competitors, the European Economic Area and the U.K., to foreclose on their supply of medical imaging solutions, especially CT, MR and PET scanners. It also feared foreclosures on supplies of radiotherapy solutions for treatment such as linear accelerators, brachytherapy devices and proton therapy equipment, oncology software for treatment planning and oncology information systems, and motion management devices.
Meanwhile, the U.S. Justice Department launched and then extended an investigation in March into the proposed Change Healthcare – UnitedHealth merger for nearly $8 billion. The addition of Change Healthcare is expected to allow Optum, Change’s subsidiary, access to data analytics and technologies that will enhance workflow and simplify transactions across healthcare systems. Critics say it threatens to harm competition and would enable a larger and more powerful Optum to enhance UHG’s incentives to favor its dominant health insurer, UnitedHealthcare, to the disadvantage of rivals.
Change and UnitedHealth in August struck a deal with the Justice Department to attempt to save the deal. They agreed to comply with a request for information for further review of the deal and not to complete the merger for 120 days. The investigation is ongoing.
Neither Nuance nor Microsoft has issued a statement on the EU’s antitrust probe. Microsoft declined to comment to Reuters, and Nuance did not respond to its request for comment.
The EU antitrust regulator has asked customers and competitors to write up concerns in a questionnaire that includes questions on whether they see both companies as competitors and if the acquisitions would negatively impact their own businesses, according to Reuters.
Compared to minimal reviews performed by the U.S. Department of Justice in June and the Australian Competition Commission in October, the EU’s probe is the most extensive one carried out around the deal by an antitrust authority. Both companies filed for approval from the European Commission’s competition bureau last month, and the regulator has until December 21 to approve the deal or launch a deeper investigation.
Proposed in April, the acquisition would allow Microsoft to integrate Nuance’s speech and conversation AI software into the Microsoft Cloud for Healthcare. Used to automate note transcriptions for doctors, the technology is expected to accelerate the adoption of cloud-based AI tools for healthcare providers.
As part of the deal, Microsoft would pay $56 in cash per share of Nuance and assume Nuance’s debt, bringing the total value of the deal to $19.7 billion and making it the largest acquisition the company has made in years. While initially expecting to close the deal by the end of this year, the companies announced last month that they were pushing the timeline back to somewhere between the final quarter of 2021 and the first quarter of 2022.
Nuance says it currently serves 77% of U.S. hospitals. In any of its deals, it can use customer data to advance its voice recognition systems. Since big cloud vendors do not have unrestrained access to customers’ data for research and development, acquiring Nuance offers Microsoft a unique opportunity but is a concern to some.
Additional potential concerns may include the fact that Microsoft could force its Office suite on Nuance customers if it were to package them together, said Steven Weber, a University of California Berkeley professor studying the intersection of technology and health care, in an interview with Reuters.
Until now, Microsoft has been able to avoid antitrust lawsuits and investigations over the last decade, unlike competitors like Alphabet Inc.’s Google, Facebook, Apple and Amazon. In addition to big tech companies, high up companies in the healthcare industry have also faced pushback from regulators around potential deals.
Following months of investigating, the European Commission earlier this year gave Siemens Healthineers the nod to proceed with its $16.4 billion acquisition of Varian Medical Systems. The deal was announced in August 2020 and completed in April this year, and marked Siemens’ return to the radiotherapy market after a decade-long absence.
The Commission launched its investigation out of concern that the deal would cause competitors, the European Economic Area and the U.K., to foreclose on their supply of medical imaging solutions, especially CT, MR and PET scanners. It also feared foreclosures on supplies of radiotherapy solutions for treatment such as linear accelerators, brachytherapy devices and proton therapy equipment, oncology software for treatment planning and oncology information systems, and motion management devices.
Meanwhile, the U.S. Justice Department launched and then extended an investigation in March into the proposed Change Healthcare – UnitedHealth merger for nearly $8 billion. The addition of Change Healthcare is expected to allow Optum, Change’s subsidiary, access to data analytics and technologies that will enhance workflow and simplify transactions across healthcare systems. Critics say it threatens to harm competition and would enable a larger and more powerful Optum to enhance UHG’s incentives to favor its dominant health insurer, UnitedHealthcare, to the disadvantage of rivals.
Change and UnitedHealth in August struck a deal with the Justice Department to attempt to save the deal. They agreed to comply with a request for information for further review of the deal and not to complete the merger for 120 days. The investigation is ongoing.
Neither Nuance nor Microsoft has issued a statement on the EU’s antitrust probe. Microsoft declined to comment to Reuters, and Nuance did not respond to its request for comment.