Microsoft just announced that it has acquired PhoneFactor, a company that specializes in ‘multifactor authentication’ (MFA) solutions.

Financial terms of the deal were not disclosed.

Founded in 2001, PhoneFactor basically provides phone-based two-factor authentication solutions to government, healthcare, enterprise, banking and other clients and also works for Web apps.

In a statement, Bharat Shah, corporate VP of Microsoft’s Server and Tools division, says:

“The acquisition of PhoneFactor will help Microsoft bring effective and easy-to-use multifactor authentication to our cloud services and on-premises applications. In addition, PhoneFactor’s solutions will help Microsoft customers, partners and developers enhance the security of almost any authentication scenario.”

PhoneFactor’s solution already works with certain Microsoft products and services, including Outlook Web Access (OWA) and Internet Information Services, and interoperates with Active Directory.

From PhoneFactor’s website:

PhoneFactor is trusted by thousands of leading organizations to secure millions of logins and online transactions each year. In addition to offering unparalleled security, PhoneFactor is a cost effective and user-friendly alternative to security tokens, which had previously dominated the two-factor market.

The phone-based authentication market, led by PhoneFactor, is expected to largely replace tokens particularly in organizations where security and simplicity are primary concerns.

Also check the FAQ about the deal.

In a blog post, PhoneFactor Timothy Sutton CEO writes:

When we initially launched PhoneFactor, we had a vision to deliver strong authentication as a seamless part of almost every process where an individual needs to access confidential or proprietary data.

We wanted to solve this problem broadly, whether it’s from a server on-premises or in the cloud, or whether the individual is using a PC, smartphone, or tablet.

Phones provided the ideal platform: easy to use for the masses at scale, yet also capable of supporting enterprise-scale implementation of multi-factor authentication. So, we built authentication solutions that integrated exceptionally well with enterprise platforms like those provided by Microsoft.

The PhoneFactor purchase is the third (disclosed) acquisition for Microsoft this year, after snapping up Yammer and Perceptive Pixel earlier.

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