Microsoft acquires AI startup Semantic Machines

Only a couple of weeks ago, Google revealed Google Duplex, a new platform that the tech giant believes will take its AI-powered Google Assistant to new heights. In a stunning display of the tech’s abilities, Google Duplex was able to hold a conversation with a human without any noticeable indications that it was a bot. Ethical and moral concerns notwithstanding, this “conversational AI” is the future tech companies have been working towards for years, and Google appears to have taken the clear lead. However, Microsoft has announced its intention to catch up, with the acquisition of a Berkeley, California-based conversational AI startup, Semantic Machines Inc., for an undisclosed amount.
 
In a blog post announcing the acquisition, David Ku, CVP and Chief Technology Officer of Microsoft AI & Research, wrote, “We are excited to announce today that we have acquired Semantic Machines Inc., a Berkeley, California-based company that has developed a revolutionary new approach to building conversational AI. Their work uses the power of machine learning to enable users to discover, access, and interact with information and services in a much more natural way, and with significantly less effort.”
 
Semantic Machines was founded in August 2014, and calls itself “a provider of next-generation Conversational AI technology that will revolutionize customer service and home automation”. The company has some impressive minds from the field of conversational AI, including serial techpreneur Daniel Roth, prominent natural language AI researchers UC Berkeley professor Dan Klein and Stanford University professor Percy Liang, and Larry Gillick, the former Chief Scientist behind Siri at Apple. The company has previously raised nearly $21 million in funding from two rounds – $8.5 million from a Series A round in November 2014, and $12.4 million from a Series B round in December 2015. Existing investors include Bain Capital Ventures and General Catalyst Partners.
 
Microsoft has been pushing heavily for greater adoption and usage of its digital assistant Cortana and social chatbot Xiaolce. Cortana comes embedded in the latest version of the company’s Windows operating system for desktop and mobile, and Xiaolce has had more than 30 billion conversations, averaging up to 30 minutes each, with 200 million users across platforms in China, Japan, the United States, India and Indonesia. The company has also impressive traction with Microsoft Cognitive Services (“a set of APIs, SDKs and services available to developers to make their applications more intelligent, engaging and discoverable”) and its Azure Bot Services.
 
However, with Google Duplex raising the stakes, Microsoft is clearly committing itself to ensuring its AI assistants are as cutting-edge as Google Assistant, if not better.
 
In his blog post, David wrote, “With the acquisition of Semantic Machines, we will establish a conversational AI centre of excellence in Berkeley to push forward the boundaries of what is possible in language interfaces. Combining Semantic Machines’ technology with Microsoft’s own AI advances, we aim to deliver powerful, natural, and more productive user experiences that will take conversational computing to a new level. We’re excited to bring the Semantic Machines team and their technology to Microsoft.” The race is on, with the world’s first truly “human-like” AI as the prize. The stakes are high, and Microsoft is clearly going all in.

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