Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Microsoft invests $2 billion in London Stock Exchange cloud deal

Microsoft invests $2 billion in London Stock Exchange cloud deal

Microsoft (MSFT.O) will buy a 4% stake worth $2 billion in the London Stock Exchange Group (LSEG.L), in the latest sign of blurring boundaries between Big Tech and financial firms which have raised some concerns among regulators.
LSEG said on Monday the deal would bring a "meaningful" upside to revenues after 2025 from selling more of its existing products via Microsoft apps to broaden the customer base, along with better pricing of products, but it declined to give any specific estimates.

Deepening ties between the handful of big global cloud companies such as Microsoft, Google (GOOGL.O), Amazon (AMZN.O) and IBM (IBM.N), and financial companies like banks and exchanges, have prompted regulators to scrutinise the links more closely.

Microsoft has a longstanding relationship with LSEG, and the exchange group's Chief Executive David Schwimmer said that about a year ago they began talks on a more strategic relationship.

"It's a long term partnership. In terms of the products we will be building together, I would expect our customers to start to see the benefits of that 18 to 24 months out and we will continue building from there," Schwimmer told Reuters.

In November 2021, Google said it would invest $1 billion in CME Group to move the U.S. derivatives exchange's trading systems to the cloud. In the same month, U.S. exchange Nasdaq and Amazon announced a similar multi-year partnership.

Regulators have expressed concern about the over-reliance of financial firms on too few cloud providers, given the disruption this could cause if a provider serving many clients went down.

The European Union has just approved a law introducing safeguards on cloud providers in financial services, with Britain set to follow suit.

"You should assume we do not like to surprise our regulators," Schwimmer said, when asked if LSEG has ensured that regulators were on board.

'MEANINGFUL"

LSEG said the link with Microsoft, which gives the software group a seat on LSEG's board, is a partnership to reap the benefits of "consumption-based pricing", and not a traditional cloud deal.

"We will continue to maintain our multi-cloud strategy and working with other cloud providers," Schwimmer said.

Incremental costs will total 250 to 300 million pounds over 2023 to 2025, with a 50 to 100 basis points impact on EBITDA margin over that two-year period.

Analysts asked Schwimmer to elaborate on his comment about a "meaningful" upside to revenues from the deal, but he declined to do so.

"This feels like a key milestone in LSEG's journey towards being information solutions-centric, even if 'meaningful' revenue growth specifics are lacking," analysts at Jefferies said.

Jefferies analysts said the deal could "transformationally" broaden the appeal of LSEG's Workspace, with a potentially compelling alternative to Instant Bloomberg available for the first time.

LSEG shares were up about 3% and were the top performers on the blue-chip FTSE 100 index (.FTSE) and on course for their strongest day since mid-August.

Microsoft's Frankfurt listed shares were down about 0.4%.

'INTEROPERABILITY'

As part of the deal, LSEG has made a contractual commitment for minimum cloud-related spend with Microsoft of $2.8 billion over the term of the partnership.

The initial focus will be on delivering "interoperability" between LSEG Workspace and Microsoft Teams, Excel and PowerPoint with other Microsoft applications, and a new version of LSEG’s Workspace, Microsoft said.

LSEG and Microsoft will look at how they could work together to potentially shift trading or clearing activities to the cloud

"It's in a more exploratory phase at this point, but we will update the market as that continues to develop," Schwimmer said.

LSEG bought Refinitiv for $27 billion from a Blackstone and Thomson Reuters' consortium, which turned the exchange into the second largest financial data company after Bloomberg LP.

Microsoft will buy LSEG shares from the Blackstone (BX.N)/Thomson Reuters (TRI.TO), consortium, the exchange operator said. The deal will make Microsoft the seventh biggest shareholder in LSEG, based on Refinitiv data.

Thomson Reuters, which owns Reuters News, has a minority shareholding in LSEG following the Refinitiv deal. LSEG also pays Reuters for news.

Microsoft's purchase is expected to complete in the first quarter of 2023.

($1 = 0.8141 pounds)
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
×