Microsoft gets a stake of 4% in the London Stock Exchange Group, by investing $2 billion. In fact, this is the latest indication of the blurring lines between Big Tech and financial companies that authorities are concerned about.
While declining to provide exact figures, LSEG stated on Monday that the transaction will result in a “significant” increase in revenues after 2025 as a result of selling more of its current items through Microsoft apps to a wider client base and improved product pricing.
Furthermore, regulators are now looking more closely at the connections between a small number of major global cloud corporations, like Microsoft, Google, Amazon, and IBM, and financial institutions like banks and exchanges.
Additionally, Microsoft and LSEG have a long-standing partnership, and according to David Schwimmer, CEO of the exchange group, discussions regarding a more strategic partnership started approximately a year ago.
In order to migrate the trading systems of the US derivatives exchange to the cloud, Google announced in November 2021 that it would invest $1 billion in CME Group. Also, a similar long-term partnership between Amazon and the American exchange Nasdaq was announced in the same month.
Regulators are worried about financial organizations’ excessive reliance on a small number of cloud service providers because of the potential for chaos if one of these providers went down and served a large number of customers.
Besides, a rule offering protections for cloud service providers in financial services has just been adopted by the European Union, and Britain is about to follow suit.
As Microsoft gets a stake of 4%, LSEG has agreed to spend a minimum of $2.8 billion with the tech giant on cloud-related services over the partnership’s duration.
Delivering “interoperability” between LSEG Workspace and Microsoft Teams, Excel and PowerPoint with other Microsoft programs, and a new version of LSEG’s Workspace will be the initial focus, according to Microsoft.
Moreover, Microsoft and LSEG will consider how they may collaborate to perhaps move trading or clearing operations to the cloud.
Nevertheless, the exchange operator announced that Microsoft will purchase LSEG shares from the Blackstone/Thomson Reuters partnership. Besides, according to Refinitiv statistics, the transaction will elevate Microsoft to the seventh-largest shareholder in LSEG.
