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Microsoft To Buy the Chatbot Startup XOXCO

Microsoft is acquiring chatbot startup XOXCO in an effort to kickstart adoption of the emerging technology.

The tech giant said Wednesday that it plans to buy XOXCO for an undisclosed amount.

The startup originally focused on software product design and consulting services and gained attention for creating a silly app that lets people send taco emoji through online messaging. In 2015, it raised $1.5 million to focus on chatbots, which let people send messages to automatically schedule online meetings in their digital calendars or get answers to their customer service questions.

At the time, the company targeted workplace messaging startup Slack, and built the popular Howdy bot, used for tasks like reminding people of meetings within Slack’s chat app. It’s since expanded to more general chatbot coding tools that work with other services like Facebook Messenger. Slack was also an early XOXCO investor, according to deal tracking service PitchBook.

Microsoft said it would continue supporting the Howdy bot for Slack, which is also a competitor to the Microsoft Teams app.

Microsoft executives pitched the XOXCO acquisition during a media event in San Francisco on Tuesday as a way to spur corporate customers to build chatting software using Microsoft tools. The idea, ultimately, is to get customers to also use Microsoft’s other services, like its Azure cloud computing service or machine-learning tools, the thinking goes.

Despite the hype surrounding chatbots in recent years, most companies are still in the early days of using chatbots to handle complex tasks like automatically booking hotel rooms while conversing like an actual human.

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On Wednesday, Microsoft also released guidelines for companies that are building chatbots, encouraging them to make sure they are “responsible and trustworthy,” a nod to past problems involving the technology reacting in unexpected ways. Microsoft, for instance, received criticism for its Tay chat bot that fielded offensive comments from online trolls and then repeated them.

In the aftermath, some companies may feel hesitant about developing chatbots for fear that they could go rogue. Microsoft’s guidelines are intended to give companies a checklist of things to look out for and make sure they don’t inadvertently tarnish their reputations.

Some of XOXCO’s investors include Bloomberg Beta, True Ventures, Outlier Ventures, Betaworks, and Slack, according to PitchBook.