Microsoft Acquires Startup Specializing in Conversational AI

Artificial intelligence (AI) has made remarkable strides, enabling intelligent autonomous systems, immersive augmented reality games, and virtual personal assistants to thrive. Yet, there remains vast potential to unlock. Tech giant Microsoft Corp. (MSFT) has revealed its acquisition of Semantic Machines Inc., a startup pioneering core AI technology designed to make conversational computing genuinely natural and intuitive.

Based in Berkeley, California, Semantic Machines employs a distinctive AI approach by leveraging machine learning to embed meaningful context into chatbot interactions. This process involves gathering data, comprehending conversational context, and dynamically applying that understanding to future dialogues.

For example, while virtual assistants like Siri, Cortana, or Google Assistant can effortlessly provide weather updates, play music, or send messages upon command, their current capabilities are largely task-specific. These assistants lack the ability to engage in seamless, natural conversations with users—they primarily respond to direct instructions. Semantic Machines aims to close this gap by harnessing machine learning to facilitate more fluid, context-aware exchanges, enabling users to interact with information and services in a way that feels genuinely conversational. (Also see: Microsoft Explores Multilingual Speech to Enhance Cortana.)

Envisioning the Future of Intelligent Conversations

This acquisition strengthens Microsoft’s ongoing commitment to advancing speech recognition and natural language understanding technologies. Microsoft’s vision is to transform the computing environment into one where devices can see, hear, speak, and comprehend human interactions just like people do.

Other industry leaders are also exploring similar innovations. For instance, Amazon.com Inc. (AMZN) recently announced plans to equip its virtual assistant Alexa with a form of “memory” to better contextualize conversations with users. Likewise, Alphabet Inc.’s Google (GOOGL) has made progress developing prototypes that create a more human-like interaction experience with their virtual assistants.

Unlike Amazon and Google, which have successfully launched AI-powered voice-activated smart speakers, Microsoft currently lacks a flagship device in this category. Its 2016 release of the Invoke smart speaker, developed in partnership with Harman Kardon, did not achieve widespread adoption.

David Ku, Chief Technology Officer of Microsoft AI and Research, stated, “By acquiring Semantic Machines, we are establishing a conversational AI center of excellence in Berkeley to push the boundaries of language interface capabilities. Integrating their technology with Microsoft’s AI innovations will enable us to deliver powerful, natural, and highly productive user experiences, elevating conversational computing to unprecedented levels.”

Financial details of the deal remain confidential. (Also see: Amazon’s Alexa and Microsoft’s Cortana Making Strides Against Apple’s Siri.)

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