Microsoft buys UK start-up as race for AI hots up

Microsoft has acquired Swiftkey, a London-based artificial intelligence (AI) start-up that makes a predictive keyboard for smartphones, the company announced on Tuesday.

The U.S. technology giant paid $250 million for Swiftkey, as the FT first reported. The figure was confirmed by a CNBC source.

Swiftkey raised an undisclosed amount of money last year and the buyout represents an exit for investors including Index Ventures and Octopus Ventures.

The acquisition is a continuation of Microsoft's buying spree as it looks to become the dominant player in productivity apps on mobile and desktop. In just over a year, Microsoft has bought email app Acompli, calendar app Sunrise and Wunderlist, an organizational app that lets you create to-do lists.

'Productivity', which refers to digital services to help people organize their lives such as calendars and notes, has been a big buzzword within Microsoft since Satya Nadella took over as chief executive as the company pushes its cloud-based software and services.

Swiftkey

But artificial intelligence in particular has also been a key focus for U.S. technology companies on the whole. In 2014, Google snapped up DeepMind, which has demonstrated its ability to master the ancient Chinese game of Go. In January, Apple acquired an emotion-detecting start-up called Emotient.

Microsoft has also been developing software in the field of artificial intelligence. Its digital personal assistant called Cortana – like Apple's Siri – is an example of this. Swiftkey develops a smartphone keyboard that allows people to swipe across different letters in one stroke to spell a word. It can "learn" your typing style and claims to make typing faster. The acquisition of Swiftkey will give Microsoft an expert team in AI.

The British start-up has not had the most comfortable ride as of late. It is installed on over 300 million devices but accounts for TouchType Limited, SwiftKey's registered company, showed revenues fell from to £9.9 million in 2013 to £8.4 million in 2014. It used to charge $4 for its app too, but scrapped the fee in 2014.

"Our number one focus has always been to build the best possible products for our users. This will not change. Our apps will continue to be available on Android and iOS, for free. We are as committed as ever to improving them in new and innovative ways," Swiftkey co-founders Jon Reynolds and Ben Medlock, said in a statement on Tuesday.