Microsoft buys SwiftKey: How artificial intelligence became hot UK export

Microsoft has snapped up SwiftKey for $250m in the latest US acquisition of a British AI technology success story

SwiftKey software was integrated into the Intel technology that allows Professor Stephen Hawking, who has motor neurone disease, to communicate through a sensor in his cheek (EPA)

If you can’t beat them, join them. So the saying goes, and so it proved for Microsoft, which has given up trying to beat SwiftKey at its own game and bought the predictive text company for a reported $250m (£172m).

The US technology giant has developed its own smartphone quick typing technology called Word Flow, which is available on its Windows phones.

But it is SwiftKey, a small, London-based start-up founded in 2008 by Cambridge graduates Jon Reynolds and Ben Medlock, which has taken the world by storm.

Its predictive touchscreen keyboard has been installed on more than 300 million Android and iOS devices around the world, helping put an end to the typos and incorrect “corrections” that have become a bugbear of the smartphone era.

With SwiftKey the user swipes across letters in one stroke to spell words (it’s much quicker than pressing each letter individually, once you learn the technique), and the clever part is that the more you use it, the more the software “learns” your style and can better predict your next word.

Like many of the big Silicon Valley firms, SwiftKey also has an “experimental” division (which is yet to make any money), called Greenhouse. From here stemmed its assistive technology platforms aimed at people with conditions such as motor neurone disease that make typing difficult or impossible.

Its software was integrated into the Intel technology that allows Professor Stephen Hawking, a motor neurone disease sufferer, to communicate through a small sensor in his cheek.

SwiftKey’s software enables his computer to predict whole words instead of just letters, making communication much easier and quicker.

Mr Reynolds and Mr Medlock will stay on after the takeover, and insisted that it would not alter their approach to improving the product.

“Our number one focus has always been to build the best possible products for our users. This will not change,” they explained. “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.”

So how did a couple of whizz kids from uni manage to steal a march on Microsoft, a global tech powerhouse and one of the world’s largest companies? Raising more than $20m from venture capital firms helped. Accel Partners, an early Facebook backer; Index Ventures, an early investor in Skype and Just Eat; and Octopus Investments, which made millions from funding Zoopla in its early years, all supported the company in its infancy.

Of course, their backing came in exchange for stakes in the business, and all three will have made millions on the sale, along with the founding pair, who are rumoured to be pocketing $30m each.

The switch in 2014 to a “freemium” model, allowing users to download the basic app free, also played a big part in SwiftKey’s rise.

The financial results for the year were less impressive as a result, with turnover falling from £9.9m in 2013 to £8.4m the following year, as the company swung to a £5.3m loss.

However, the switch – prioritising user growth over immediate profits – appears to have been validated by the takeover and the fact that the software is now used by hundreds of millions worldwide.

SwiftKey estimates (and who are we to argue?) that users have saved nearly 10 trillion keystrokes, across 100 languages, saving more than 100,000 years in combined typing time.

Harry Shum, Microsoft’s executive vice-president for technology and research, whose division the company will now be included in, said: “Those are impressive results for an app that launched initially on Android in 2010 and arrived on iOS less than two years ago.”

Mr Shum revealed in a blog post that Microsoft would continue to develop SwiftKey’s app, integrate it with Word Flow and explore “scenarios for the integration of the core technology across the breadth of our product and services portfolio”.

He added: “SwiftKey’s predictive technology aligns with Microsoft’s investments and ambition to develop intelligent systems that can work more on the user’s behalf and under their control.”

Evidently then, the artificial intelligence (AI) aspect is key to Microsoft’s interest – and nor is it the first of the big US tech outfits to swoop on promising AI software.

Google, renowned for its penchant for outlandish “moonshot” ventures such as driverless cars, bought the London-based DeepMind in 2014 for an undisclosed sum – thought to be about $500m – just four years after the company was established.

Facebook is also in on the act, having reportedly approached SwiftKey about a deal two years ago.

Even Apple, which has historically developed its own technologies, has begun buying smaller specialist software as it diversifies into other areas. In October, the iPhone maker snapped up VocalIQ, another Cambridge-based AI firm, to improve Siri, its virtual voice assistant, and as part of its drive into in-car technology.

In January Apple bought Emotient, a company whose technology analyses facial expressions to judge human emotion. It is unclear what its plans for the software are, but it is evident Apple sees AI as a big part of its future.

For many start-ups, selling out to a huge company might be a way of cashing in on a great initial idea and years of hard work.

While that is true for SwiftKey, in this case it is about more than just the money. Having the might of Microsoft on their side, and the financial firepower that comes with a global heavyweight, will certainly help to ensure its assistive technology reaches more than just a handful of people – so that others like Professor Hawking are able to communicate more easily.

Smart thinkers: The British AI brigade

SwiftKey

The predictive text firm founded by two Cambridge graduates has just agreed a $250m sale to Microsoft. Its smart keyboard is already on 300 million devices worldwide, but SwiftKey hopes the backing of the US tech giant will propel it to new heights.

VocalIQ

Also Cambridge-based, the speech processing company was bought by Apple – seen as a sign that Apple was ready to prove that its Siri voice software is no toy. It is thought the technology could lead to personal assistants – think Jarvis in Iron Man – in cars so that drivers keep their eyes on the road.

DeepMind

The London-based machine-learning company is behind AI technology which solves tasks. For example, it managed to play Atari video games to the same level as humans without any prior programming. It sold to Google in 2014 for $500m – the web group’s biggest European acquisition to date.

Stratified Medical

The drug developer based in London uses AI alongside human experts to help in the drug discovery process. It has already identified and licensed out two new Alzheimer’s drugs to an unnamed pharmaceutical company in a deal potentially worth hundreds of millions of dollars.