October 1, 2022
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Microsoft has acquired Two Hat, a content moderation provider that’s helped keep harmful content off Xbox.

The company was founded by a former Disney Interactive security specialist nearly 10 years ago. Two Hat uses AI to classify and filter billions of human interactions across messages, images, usernames, videos, and more. Microsoft has been working with Two Hat for the past few years to improve its Xbox communities, but the terms of the deal were not disclosed.

In a statement, the head of Xbox product services, Dave McCarthy said: “For the past few years, Microsoft and Two Hat have worked together to implement proactive moderation technology into gaming and non-gaming experiences to detect and remove harmful content before it ever reaches members of our communities. Two Hat’s technology has helped to make global communities in Xbox, Minecraft and MSN safer for users.”

The acquisition is designed to improve Microsoft’s first-party content moderation in gaming, and even extend to the company’s consumer services. Microsoft has big plans for consumer services, after hiring a former Uber exec to lead a new consumer apps effort earlier this year.

Two Hat also has a number of its own customers, and Microsoft isn’t planning to stop supporting them.

McCarthy says: “This is a deep investment in assisting and serving Two Hat’s existing customers, prospective new customers and multiple product and service experiences here at Microsoft. With this acquisition, we will help global online communities to be safer and inclusive for everyone to participate, positively contribute and thrive.”

Microsoft has been trying to acquire popular communities recently, including TikTok, Pinterest, and Discord. CEO Satya Nadella has expressed an interest in Microsoft focusing on creators and communities, and moderation plays a critical part in any online community-based service.

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