Microsoft Beats Amazon to Win $10 Billion Pentagon Defense Contract

Ruben Fields
February 28, 2020

After all, Microsoft is a more focused company and Amazon is now targeting nearly anything and everything where it thinks it can make a buck or displace other businesses.

The Pentagon said Friday it is awarding a $10 billion cloud computing contract to Microsoft, following a highly scrutinized bidding process which Amazon had been favored to win. Trump has always been at odds with Amazon's Chief Executive Jeff Bezos.

The company said that a "detailed assessment purely on the comparative offerings" would "clearly lead to a different conclusion", according to the statement.

Wedbush analyst Dan Ives told CNBC the deal was a "game changer" for Microsoft, stating that it "will have a ripple effect for the company's cloud business for years to come".

"We're surprised about this conclusion", an AWS spokesperson told CNBC in an email.

Trump has often invoked Amazon or Amazon CEO Jeff Bezos in his attacks against the Washington Post, which is owned by Bezos.

"Today the Department of Defense has taken another step forward in the implementation of our Cloud Strategy with the award of an enterprise general-purpose cloud contract to Microsoft", the Pentagon said in a statement. Trump in August said his administration was reviewing Amazon's bid after complaints from other companies. "We remain deeply committed to continuing to innovate for the new digital battlefield where security, efficiency, resiliency, and scalability of resources can be the difference between success and failure".

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"Many Microsoft employees don't believe that what we build should be used for waging war", read a blog post on Medium.

Earlier this week, Defense Secretary Mark Esper recused himself from considering the contract because his son works at IBM and he said he wanted to avoid an appearance of a conflict of interest, though IBM hasn't been in the running for awhile now.

In an excerpt of "In Holding The Line: Inside Trump's Pentagon with Secretary Mattis" provided to Task and objective, author Guy Snodgrass describes the shocking moment between Trump and Mattis.

Microsoft said it was working on a comment.

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.

The government has ramped up scrutiny of large technology companies, including Amazon, Apple Inc., Facebook Inc. and Google, over issues ranging from consumer privacy to marketplace competition.

The online shopping giant had been considered a front-runner for one of the world's most sensitive and coveted military contract, which will last for ten years and cover both administrative and combat operations. "JEDI Cloud is critical to our women and men in uniform", he wrote. He has said that the single source bid amounts to "limiting competition". Although followed by Microsoft, Bill Gate's technology company only captured 15.5 per cent.

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