UK-based artificial intelligence firm SwiftKey has been acquired by Microsoft, the company has confirmed.
The Financial Times reports the deal is worth $250m (£174m).
SwiftKey is known for its predictive keyboard, which can be found installed on millions of smartphone devices.
The company said it was a "milestone" in its history.
"Our mission is to enhance interaction between people and technology. We think these are a perfect match, and we believe joining Microsoft is the right next stage in our journey," said SwiftKey's founders Jon Reynolds and Ben Medlock in a blog post.
The company, started by the Cambridge University graduates in 2008, is the latest UK artificial intelligence (AI) firm to be bought up by a US tech giant.
DeepMind was bought by Google in 2014, for £400m. Another firm, VocalIQ, was bought recently by Apple.
As well as the popular smartphone app, SwiftKey is known for being behind the computer software on Prof Stephen Hawking's wheelchair.
The deal furthers Microsoft's new mobile strategy, spearheaded by chief executive Satya Nadella.
Instead of focusing on hardware - where the company has a tiny share of the market with its Windows Phone range - the firm is now looking to build up a range of productivity software to be used on any kind of device.