Microsoft To Acquire 4% Stake In London Stock Exchange Group

Microsoft is to acquire a 4% stake in the London Stock Exchange Group (LSEG), the company that owns the London Stock Exchange as well as several other businesses including financial market data company Refinitive which LSEG acquired from a Blackstone/Thompson Reuters consortium last year for $27 billion, TechCrunch reported.

According to TechCrunch, Microsoft’s stake, which it bought from the same Blackstone/Thomson Reuters consortium, constitutes part of a bigger 10-year partnership, which includes a contractual commitment for LSEG to spend a minimum of $2.8 billion on cloud computing services. This will involve LSEG migrating its data platform and “other key technology structure” over to Azure, while the Workplace data and analytics product it procured as part of its Refinitiv acquisition last year will be integrated with core Microsoft applications including Teams and the broader Microsoft 365 software site.

Microsoft posted information about this on their website. Microsoft titled it “LSEG and Microsoft launch 10-year strategic partnership for next generation data and analytics and cloud infrastructure solutions; Microsoft to make equity investment in LSEG through acquisition of Shares”.

Strategic partnership highlights include:

New collaboration to architect LSEG’s data infrastructure and build intuitive next-generation productivity, data and analytics and modeling sources with Microsoft Azure, AI, and Microsoft Teams.

Step-change in services for customers across the financial markets value chain, including an enhanced version of LSEG Workspace with seamless Teams communication and Microsoft 365 interoperability with built-in compliance for the first time.

LSEG’s data platform and other key technology infrastructure to migrate to Microsoft’s Azure, enhancing its existing cloud migration strategy.

Microsoft to purchase approximately 4% equity stake in LSEG through the acquisition of shares from the Blackstone/Thompson Reuters Consortium.

It is intended that Scott Guthrie, Microsoft’s Executive Vice President, Cloud and AI Group, will be appointed as a non-executive director of LSEG in due course subject to receipt of appropriate approvals.

Reuters reported it is the latest sign of deepening ties between financial services providers and a handful of big global cloud companies such as Microsoft, Google, Amazon, and IBM, which have prompted regulators to scrutinize the ties more closely.

According to Reuters, Microsoft has longstanding links with LSEG, but the exchange group’s Chief Executive David Schwimmer said that about a year ago they began talks on closer ties.

Reuters also reported that regulators have expressed concerns about the over-reliance of financial firms on two few cloud providers, given the disruption this could case across the sector if a provider went down. Reuters stated that the European Union has just approved a law introducing safeguards on cloud providers in financial services, with Britain set to follow suit.

Recently, The U.S. Federal Trade Commission (FTC) sued Microsoft over its Acquisition of Activision Blizzard. While I don’t think that Microsoft’s stake in the London Stock Exchange has anything to do with the Activision Blizzard acquisition, it’s possible the FTC may decide to look into that.