Microsoft Wins $10B Pentagon Cloud Contract, Amazon Loses Out

The US government has awarded Microsoft a massive $10 billion contract to run the Pentagon's cloud network.

On Friday, the Department of Defense selected Microsoft for the Joint Enterprise Defense Infrastructure contract, also known as JEDI. As part of the deal, Redmond will supply cloud computing for the Pentagon over the next decade.

The JEDI contract calls for Microsoft's Azure service to provide a fast online network to power US military operations. The cloud infrastructure will also need to be able to defend against the most sophisticated cyber attacks while facilitating access to AI-powered algorithms for defense analytical purposes.

The news is raising eyebrows because Microsoft's rival in the cloud computing space, Amazon, was considered to be the front-runner for the JEDI contract, according to The New York Times. But back in July, President Trump said he was considering intervening in awarding the JEDI contract, citing complaints made by the other bidders, including Microsoft, Oracle, and IBM.

It's no secret that Trump is no fan of Amazon CEO Jeff Bezos. The president has accused the e-commerce giant of putting thousands of retailers out of business without paying its fair share in taxes. In addition, Trump has criticized the reporting from The Washington Post, a newspaper Bezos owns.

So far, the Department of Defense hasn't explained why Microsoft won the contract. The department's statement merely says: "All offerors were treated fairly and evaluated consistently with the solicitation's stated evaluation criteria. Prior to the award, the department conferred with the DOD Inspector General, which informed the decision to proceed."

In response to losing out on the contract, an Amazon spokesperson said: "We're surprised about this conclusion. AWS (Amazon Web Services) is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion." The company is also considering a legal challenge to the contract over Trump's possible interference, according to Bloomberg.

As for Microsoft, the contract is a big win for its Azure cloud computing service. But the company's work on JEDI may also attract greater scrutiny and even protest about the company's activities with the US military. In February, a group of Microsoft employees published an open letter opposing the company supplying its HoloLens technology to the US Army over concerns the headsets will be used to conduct warfare.

So far, Microsoft hasn't commented on the contract.

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In the future, the Department of Defense said it expects more cloud computing contracts to be offered. "DOD will continue to partner closely with industry to bring the best of commercial innovation to bear on behalf of our nation's warfighters," the department added.

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