Google Invests in $1B in CME Group as Part of Long-Term Google Cloud Deal


Image source: Techcrunch

On 5th November 2021 Google Cloud and The CME Group announced a 10-year contract to migrate CME’s futures and options markets to the cloud. A $1 billion investment from Google in CME is one of the deal’s components. Google, on the other hand, refused to specify how much the entire agreement is worth. This isn’t your typical transaction, says Philip Moyer, VP of strategic industries at Google Cloud, where Google just assists the customer in moving workloads to the cloud. Rather, this is a demonstration by Google and CME that we’re truly dedicated to the long-term journey required to bring the most difficult portions of the financial services business to the cloud, Moyer explained.

He claims that the sale is complicated since CME has some of the most stringent security, latency, redundancy, and recovery criteria. The firms aren’t disclosing how the arrangement is structured in terms of costs, but the idea is to roll it out in stages, starting with the simplest workloads with the shortest latency needs and then moving on to data analytic tooling. Finally, in the last step, the corporations intend to migrate the workloads that are most latency-sensitive to the cloud. According to Moyer, this is a big thing, and if it lasts a decade, it will change the way financial services businesses like CME operate. Along the way, Google plans to employ its global network, resiliency, AI/ML, data technologies, and global accessibility to improve the resiliency and accessibility of CMEs on a global scale.

Image source: techcrunch

Apart from the broad scale of the deal, the key question is where the $1 billion investment comes in, and Moyer says it’s all about demonstrating to CME that it, too, has skin in the game. Non-voting shares is included in the investment. There are no board seats available, and the CME board is free to use the funds as it sees fit. However, according to Moyer, the investment is intended to demonstrate that Google is committed to the relationship’s long-term success. While there are many unknowns in this acquisition, it has the potential to be a significant one that, if successful, will allow Google Cloud to enter the wider financial services sector. Google has always had the benefit of being able to run large-scale cloud services as part of its core business. If it can start capturing more large-scale cloud enterprises that can benefit from its knowledge, it could be able to start moving the market share needle more significantly. With $4.5 billion in sales in Q3, Google was in third place in the cloud infrastructure industry, accounting for 10% of the market. According to Synergy Research, industry leader AWS generated more than $16 billion in revenue, accounting for 33 percent of the market. In the third quarter, the whole market hit $45 billion.


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