The Pentagon awarded Microsoft a $ 10 billion cloud computing contract and snubbed the early front runner Amazon, whose competitive bid drew criticism from President Trump and its business rivals. Bidding on the huge project, known as Joint Enterprise Defense Infrastructure, or JEDI, leading technology titans pitted Microsoft, Amazon, Oracle and IBM.
A spokesperson for Amazon Web Services told CBS News that the company was "surprised" by the decision.
"AWS is clearly the leader in cloud computing, and a detailed assessment of its comparative offerings clearly leads to another conclusion. We are still deeply committed to continuing to innovate for the new digital battlefield where security, efficiency , resilience and scalability of resources could be the difference between success and failure, the spokesman said.
The gigantic contract has attracted more attention than most, triggered by speculation early in the process that Amazon would be the sole winner of the deal. 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.
Mr. Trump waded into the fight in July, saying the administration would " take a very long look "at the process, saying he had heard complaints. Trump has often expressed his honor to Amazon and founder Jeff Bezos, who also owns Washington Post. At the time, he said other companies told him the contract was "not competing."
Defense Secretary Mark Esper withdrew 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 large amounts of classified data, allowing the US military to use artificial intelligence to speed up its war planning and combat capabilities.
A cloud strategy document unveiled by the Department of Defense last year asked to replace the military's "incoherent and stove information systems" with a commercial cloud service "that will empower the warrior with data and are crucial 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 the last two years have awarded more than $ 1
the statement appeared to address earlier criticisms of the award of such a big deal to one company.
The deal is a big win for Microsoft's cloud business Azure, which has long been catching up with Amazon's market-leading Amazon Web Services. Microsoft said it was preparing a statement.
According to a July report from research firm Gartner, Amazon owns nearly 48% of the public cloud computing market, followed by Microsoft in second place with close to 16%.
Over the past year, Microsoft has positioned itself as a friend of the US military. President Brad Smith wrote last fall that Microsoft has long provided technology to the military and will continue to do so, despite staff setbacks.
Oracle and IBM were eliminated earlier in the process, leaving Microsoft and Amazon to fight them in the end.
Last year, Google decided not to compete for the contract, saying it would conflict with the AI ethics principles. Google employees have been particularly adept at protesting the company's involvement in public contracts.
"It's a paradigm shift for Microsoft to win JEDI," said Dan Ives, CEO of Wedbush Securities. "And that's a big black eye for Amazon and Bezos."
Microsoft, Amazon, Google, and other technology giants have faced criticism from their own employees about doing business with the government, especially military and immigration-related projects.