SwiftKey makes keyboard applications which are used on nearly 300 million Android and Apple devices, replacing the default interfaces with a more efficient one.
The price was not disclosed but media reports said Microsoft paid $250 million.
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"In this cloud-first, mobile-first world, SwiftKey's technology aligns with our vision for more personal computing experiences that anticipate our needs versus responding to our commands, and directly supports our ambition to reinvent productivity by leveraging the intelligent cloud," said Microsoft executive vice-president for research and technology, Harry Shum.
"SwiftKey estimates that its users have saved nearly 10 trillion keystrokes, across 100 languages, saving more than 100,000 years in combined typing time."
Shum said Microsoft would continue to make the service available on "all platforms," and not only those just operated by Microsoft.
"We'll continue to develop SwiftKey's market-leading keyboard apps for Android and iOS as well as explore scenarios for the integration of the core technology across the breadth of our product and services portfolio," he said.
SwiftKey founders Jon Reynolds and Ben Medlock said in a blog post that "joining Microsoft is the right next stage in our journey."
"Eight years ago we started out as two friends with a shared belief that there had to be a better way of typing on smartphones," they wrote.
"We've come a long way since then; today hundreds of millions of people around the world, and many of the leading mobile manufacturers, rely on our language prediction technology," the post read.
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