Microsoft has made its strongest move yet into the emerging field of conversational AI by acquiring XOXCO for an undisclosed amount.

In a blog post announcing the acquisition, Lili Cheng, Corporate Vice-President for conversational AI at Microsoft, wrote that the purchase shows Microsoft is “continuing to realize (its) approach of democratizing AI development, conversation and dialog, and integrating conversational experiences where people communicate.”

In the last six months alone, Microsoft has acquired conversational AI firm Semantic Machines, AI machine teaching specialist Bonsai and Lobe, which created a visual interface which facilitates the development of AI and deep learning models without writing code.

It also made the strategic acquisition of GitHub in October this year for a sum of US$7.5 billion.

Microsoft has had mixed success developing its own bots

Microsoft has been developing a number of its own bot projects such as Xiaoice, Ruuh and It is also hoping to reposition its digital personal assistant Cortana as an integrated productivity tool rather than a standalone assistant.

A less successful venture into the bot space was the now-scuppered, an intelligence bot that was aimed at 18-24-year-olds. After making several offensive comments, including stating that it supported genocide, Microsoft pulled the plug on it.

Earlier this week, Microsoft released guidelines for companies that are building chatbots to ensure they are “responsible and trustworthy,” and avoid the embarrassing problems faced by

Eric Boyd, Corporate Vice-President for AI at Microsoft, also announced a new Virtual Assistant Accelerator solution. The assistant will combine AI tools including natural language processing, speech-to-text and an action engine into a one-stop-shop to facilitate the creation of new and improved bots.

“It’s a tool that makes it much easier for you to go and create a virtual assistant,” Boyd said. “It orchestrates a number of components that we offer, but we didn’t make them easy to use (together), so it’s really simplifying the creation of a virtual assistant.”

Microsoft’s new acquisition gives it more of a foothold in AI and chatbots

XOXCO had begun as a consulting services and software product design firm before making a successful pivot into chatbots.

In 2015, it secured US$1.5 million to develop chatbots, which can perform productivity tasks such as allowing people to automatically chatbotse online meetings in their digital calendars. Other chatbots have been employed to respond to customer service questions.

It has attracted investment from workplace messaging startup Slack along with Bloomberg Beta, Betaworks, True Ventures and Outlier Ventures.

Most notably, it developed the Slack bot Howdy, which can be used to schedule and reschedule meetings. Howdy is a competitor to Microsoft’s Teams app but the software giant said it would continue to support it.

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