By Jay Greene

Microsoft Corp. on Friday said it acquired a Montreal startup that focuses on artificial intelligence, giving the software giant another tool as it competes against rivals such as Alphabet Inc.'s Google and Salesforce.com Inc.

The startup, Maluuba, was launched in 2010 by students at the University of Waterloo. It creates programs that use natural-language processing, which helps computers understand dialogue and develop reasoning capabilities in areas of research known as deep learning and reinforcement learning.

Microsoft and Maluuba declin

With Maluuba's software, for example, workers at large organizations can type a request to locate an employee with specific knowledge, such as a tax-law expert. Maluuba's natural-language technology would then sift through documents, emails and corporate directories to pinpoint the best person, according to a blog post from Harry Shum, Microsoft's executive vice president in charge of artificial intelligence.

Microsoft and Maluuba declined to disclose the purchase price

Like many competitors, Microsoft is racing to beef up its artificial-intelligence capabilities. Last April, Salesforce bought deep-learning startup MetaMind, and in August Apple Inc. picked up machine-learning specialist Turi Inc.

Last September, Microsoft created an artificial-intelligence division with 5,000 employees, putting Mr. Shum in charge. The division includes both product managers and researchers, a pairing Microsoft hopes will accelerate the rollout of artificial-intelligence offerings.Maluuba's technology has been used in smartphones and televisions from brands such as Samsung Electronics Co. and LG Electronics Inc. A year ago, at the CES trade show in Las Vegas, the company worked with Qualcomm Inc. in a demo that let drivers communicate with an intelligent voice interface in a Maserati car.

At that time, Maluuba also raised $9 million from investors including Emerillon Capital and Nautilus Ventures to expand research and development. Maluuba has raised $11 million in total, according to co-founder Sam Pasupalak.

Ever since Satya Nadella became chief executive nearly three years ago, Microsoft has been on an acquisition tear. It has picked up more than three dozen companies since, and elevated executives from acquired companies to senior posts to guide Microsoft in emerging businesses.

Microsoft intends to retain all 50 Maluuba employees, including Mr. Pasupalak and co-founder Kaheer Suleman, who will join Microsoft's artificial-intelligence group. And Microsoft said Yoshua Bengio, the head of the Montreal Institute for Learning Algorithms and an adviser to Maluuba, will continue in that capacity. Mr. Shum described Mr. Bengio as "one of the world's foremost experts in deep learning."

Write to Jay Greene at Jay.Greene@wsj.com

(END) Dow Jones Newswires

January 13, 2017 15:34 ET (20:34 GMT)

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