Why Microsoft Is Buying Stock In London
This article is more than 2 years old
With 2022 being such a rollercoaster year, many had hoped it would end quietly. But it appears that hope was dashed after the latest news out of London. On Monday, Microsoft announced an unusual partnership with the London Stock Exchange.
Let that sink in for a moment. A major international tech company just announced a partnership with a stock exchange. But that’s not all they did.
Microsoft also purchased an almost 4% stake in the London Stock Exchange Group (LSEG). The interesting turn of events sent the European stock market into overdrive. LSEG stocks got a 4% boost already Monday morning.
The CEO of LSEG, David Schwimmer, issued a statement about the partnership. He said, “This strategic partnership is a significant milestone on LSEG’s journey towards becoming the leading global financial markets infrastructure and data business, and will transform the experience for our customers.” But what exactly does this “strategic partnership” entail?
Microsoft will work with the London Stock Exchange to introduce next-generation technology. The package will include cloud-based computing products, updated infrastructure, and new analytics solutions. Additionally, Microsoft will migrate LSEG’s existing infrastructure into Azure.
Satya Nadella, the CEO of Microsoft, praised the company’s deal with the London Stock Exchange. Nadella said, “Advances in the cloud and AI will fundamentally transform how financial institutions research, interact, and transact across asset classes, and adapt to changing market conditions.” And LSEG will spend big bucks to make that happen.
The venture includes a 10-year, $2.8 billion contract. And the London Stock Exchange will be responsible for that entire spending budget. It will have to purchase at least that much in cloud-related services during the life of the contract.
But the contract does not just stipulate a spending agreement. According to CNBC, “The release also said that Scott Guthrie, Microsoft’s executive vice president for the Cloud and AI Group, will be appointed as a non-executive director of LSEG.” The two organizations appear to be effectively merging at some levels, even if not officially.
However, the good news is that it is not a one-way street. The London Stock Exchange also brings some fascinating innovations to the table. One of those is Workspace, a product developed by LSEG.
Workspace is a collaboration, analytics, and data tool. Microsoft is so impressed that the tech giant plans to incorporate it into Microsoft Teams. It is likely one of many new products and software tools that the duo will collaborate on.
And as Microsoft continues to make advancements in Microsoft Teams, Microsoft Azure, and AI, the potential for this partnership is sky-high. That said, the two organizations make a unique combination. It is unclear what impact Microsoft’s stake in the London Stock Exchange will ultimately have.
Between their partial stake and the appointment of one of their VPs to executive director of LSEG, Microsoft gains a fair amount of control and power. However, analysts are hopeful it will boost the financial performance of both organizations. And we can all use some good business news these days.
