Microsoft and the London Stock Exchange Group (LSEG) today announced a 10-year cloud and AI partnership that sees the tech giant also taking a 4% stake in the financial institution.

The two-pronged deal starts with LSEG pledging to spend at least $2.8 billion over a decade to use Microsoft Cloud – Azure, AI and Teams. In turn, Microsoft will invest reportedly around $2 billion in LSEG by purchasing shares from the Blackstone/Thomson Reuters Consortium.

Microsoft’s investment, which is expected to close in the first quarter of 2023, comes on the heels of similar moves by other tech giants. In November 2021, Google said it would take a $1 billion equity stake in CME Group, which also will use its cloud services. In the same month, AWS unveiled a similar deal with Nasdaq but without an equity investment.

In a conference call with analysts, Microsoft and LSEG describe the deal as more than just a typical lift-and-shift cloud agreement. Building on its 2021 acquisition of financial data provider Refinitiv, LSEG will work with Microsoft to also jointly develop new products and services for data and analytics.

One new possibility is to explore the development of digital market technology in the cloud and thereby transform how market participants interact with capital markets in a broad range of asset classes.

Microsoft plans to enhance LSEG’s data and analytics platform Workspace to make it an intuitive, all-in-one solution for data and analytics, workflow and collaboration.

For the first time, LSEG clients that use Workspace will be able to collaborate with other LSEG customers using Teams. They also will be able to create financial models, run data analyses and design graphs using LSEG data and collaborate among Workspace, Teams and Microsoft 365 with built-in compliance.

Microsoft’s Azure Machine Learning will be deployed along with LSEG’s analytic and modeling capabilities to develop solutions that give financial institutions “much broader reach across sophisticated cross-asset, sustainable investment-aligned and non-traditional analytics.”

In a comment to AI Business, Robin Röhm, CEO of federated data platform startup Apheris, said LSEG sits on "valuable data and needs machine learning infrastructure to unlock its true value and apply it to AI. ... Real progress in AI will be made by taking existing models and customizing them to a very specific problem. This is the attraction of the LSEG for Microsoft: It provides machine learning-ready data that will be a key differentiator for companies as adoption of AI accelerates."

Scott Guthrie, Microsoft’s executive vice president for the cloud and AI group, will join LSEG’s board.

LSEG CEO David Schwimmer called the agreement a “significant milestone” for the exchange and will create “substantial value over time” for both companies.

Microsoft CEO Satya Nadella said advances in the cloud and AI will “fundamentally transform” how financial institutions research, interact, transact and adapt to changing market conditions. The partnership will empower customers and to “ultimately, do more with less.”