Google Inks $1 Billion Deal With CME
CME Gives Google Footing in Financial Services
In what may prove to be a game changer for Google (GOOGL) in the cloud market, the company inked a $1 billion deal with the futures exchange behemoth CME (CME). In addition to Google making a $1 billion equity investment, CME is moving its main trading system to Google Cloud. Down the road, Google Cloud will power trillions of dollars of trades for CME on a daily basis.
Cloud providers including Google, Amazon (AMZN), and Microsoft (MSFT) have been competing to win over financial services customers. This is a market which has resisted handing over data to tech companies for a long time. Now that financial institutions are becoming more open to working with tech giants, there is the potential for very lucrative deals.
A Milestone for Google
CME is the world’s biggest exchange operator, sporting a market cap of more than $79 billion. Google is currently in fourth place in the cloud market, with Amazon in the lead, followed by Microsoft and Alibaba (BABA). Google’s global market share is a mere 6.1% compared to Amazon’s more than 40%.
Google said the $1 billion equity investment in CME underscores its commitment to overhauling the financial system, not only one company’s infrastructure. CME will begin migrating to Google’s cloud next year, starting with the company’s data and clearing services. Eventually CME will move all of its markets onto Google’s cloud.
Migrating trading systems to the cloud does pose challenges, but that has not stopped exchanges from gearing up to make the move. Nasdaq already said in 2020 it would move to the cloud in the coming decade, but it has yet to select a cloud provider. Singapore Exchange and Amazon Web Services completed a test project late last year while Aquis Exchange, a European market operator, is already using AWS technology.
Google is a tiny player in the cloud market at the moment, but it has plans to grow its presence significantly. Landing a deal with CME, the world’s most valuable exchange operator, is a big step in that direction.
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