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Microsoft buys Nuance for nearly $20 billion as it readies deal frenzy

Microsoft announced Monday it would buy Nuance Communications, a software company that focuses on speech recognition through artificial intelligence, in an all-cash transaction valued at $19.7 billion (including debt assumption).

Why it matters: This is Microsoft's second-largest acquisition, behind the $26.2 billion deal for LinkedIn in 2016.

  • Microsoft is trying to leapfrog competitors like Google and Amazon as they face record antitrust scrutiny.
  • Its cloud business has also been booming during the pandemic. Microsoft's stock hit an all-time high on Friday, as it approaches $2 trillion in market value.

Details: Nuance makes money by selling software tools that help to transcribe speech. The Burlington, Massachusetts-based company, for example, powered the speech recognition engine behind Apple's voice assistant, Siri.

The big picture: The deals Microsoft is eyeing are significantly larger than its usual targets.

Bottom line: Aside from its acquisition of Linkedin, Microsoft's biggest deals have all been worth less than $10 billion. (The company purchased aQuantive for roughly $6 billion in 2007 and Skype for $8.5 billion in 2011. It bought Nokia for $7.2 billion in 2014 and and GitHub for $7.5 billion in 2019.)

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Why the startup world needs to ditch "unicorns" for "dragons"

When Aileen Lee originally coined the term "unicorn" in late 2013, she was describing the 39 "U.S.-based software companies started since 2003 and valued at over $1 billion by public or private market investors."

Flashback: It got redefined in early 2015 by yours truly and Erin Griffith, in a cover story for Fortune, as any privately-held startup valued at $1 billion or more. At the time, we counted 80 of them.

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Scoop: Facebook's new moves to lower News Feed's political volume

Facebook plans to announce that it will de-emphasize political posts and current events content in the News Feed based on negative user feedback, Axios has learned. It also plans to expand tests to limit the amount of political content that people see in their News Feeds to more countries outside of the U.S.

Why it matters: The changes could reduce traffic to some news publishers, particularly companies that post a lot of political content.

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