Pentagon hands Microsoft $10 billion ‘war cloud’ deal, cold shoulders to Amazon

The Pentagon awarded Microsoft a
$10 billion cloud computing contract , insulting early front-runner Amazon,
whose competitive bid drew criticism from President Donald Trump and its
business rivals.

Bidding for the huge project,
known as Joint Enterprise Defense Infrastructure, or JEDI, pitted leading tech
titans Microsoft, Amazon, Oracle and IBM against one another.

The giant contract has attracted
more attention than most, sparked by speculation early in the process that
Amazon would be the sole winner of the deal. Tech giants Oracle and IBM pushed
back with their own bids and also formally protested the bidding process last
year.

Oracle later challenged the
process in federal court, but lost .

Trump crossed into the fray in
July, saying that the administration would take a very long look at the process,
saying he had heard complaints.

Trump has frequently expressed his
annoyance for Amazon and founder Jeff Bezos, who also owns the Washington Post,
he said other companies told him that the contract “wasn’t competitively bid.”

Defense Secretary Mark Esper rescued
himself from the controversial bidding process earlier this week, citing a
conflict of interest because his son works for one of the companies that
originally bid.

The JEDI system will store and
process vast amounts of classified data, allowing the US military to use
artificial intelligence to speed up its war planning and fighting capabilities.

A cloud strategy document unveiled
by the Defense Department last year called for replacing the military’s disjointed
and stove-piped information systems with a commercial cloud service “that will
empower the warfighter with data and is critical to maintaining our military’s
technological advantage.”

The Pentagon emphasized in an
announcement that the process was fair and followed procurement guidelines. It
noted that over the past two years, it has awarded more than $11 billion in ten
separate cloud-computing contracts, and said the JEDI award continues our
strategy of a multi-vendor, multi-cloud environment.

The deal is a major win for
Microsoft’s cloud business Azure, which has long been playing catch-up to
Amazon’s market leading Amazon Web Services. Microsoft said it was preparing a
statement.

Amazon said Friday it was
surprised by the decision.

Google decided last year not to
compete for the contract, saying it would conflict with its AI ethics
principles. Google employees have been especially vocal in protesting the
company’s involvement with government contracts.

“It’s a prototype changer for
Microsoft to win JEDI,” said Dan Ives, managing director of Wedbush Securities.
“And it’s a huge black eye for Amazon and Bezos.”

Microsoft, Amazon, Google and
other tech giants have faced criticism from their own employees about doing
business with the government, especially on military and immigration related
projects.