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Microsoft’s £1.5bn London Stock Exchange investment comes as regulators question financial markets’ reliance on Big Tech cloud hosting
Microsoft has bought a 4 percent stake in the London Stock Exchange as part of a 10-year partnership to move the venerable stock exchange’s data to the cloud.
The £1.5 billion deal marks the biggest tie-up between Big Tech and the financial markets since tech-heavy Nasdaq announced a partnership in November last year to move its entire market infrastructure to the cloud. Similarly, in the same month, Google invested $1 billion in Chicago-based derivatives market CME Group in exchange for a 10-year tie-up.
The Microsoft deal will see LSEG spend at least £2.3bn over the next decade with Microsoft, which will provide LSEG with data analytics and cloud infrastructure products using its Azure, AI and Teams platforms. It will also use Teams, the messaging platform that Microsoft sells to companies, to create a single platform that combines financial data, analytics and collaboration tools.
LSEG said it would spend £250m to £300m between 2023 and 2025 on the new contract.
The difference, however, is that by becoming a shareholder Microsoft has some skin in the game in terms of LSEG’s success. Moreover, the LSE is reinventing itself as a rival to Bloomberg that offers real-time financial information.
“The race to the cloud has accelerated through and after Covid,” said George O’Connor, IT sector analyst at stockbroker Goodbody Financial Times, describing it as an “arms race” between Microsoft, Amazon and Google to win business. “The equity stake highlights the pointy elbows at work,” he added.
However, the deal comes just as UK regulators are questioning Big Tech’s dominance in hosting key financial information in the cloud.
In October, the Financial Conduct Authority announced that it would investigate the influence of large technology companies on the financial services sector.
Telecoms regulator Ofcom is also looking into the dominance of Microsoft, Amazon and Google in Britain’s internet services or cloud market.
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