This JEDI fight might be done, but Big Tech-military contracts are just getting started

The US Department of Defense awarded $10B JEDI contract to Microsoft, ended a year long contest.


October 29, 2019

A few days ago, the US Department of Defense awarded Microsoft a 10-year, $10B cloud services contract, finally crowning an (unexpected) victor in the yearlong contest.

It’s been a long road to the 1 true JEDI

At first, the Big ’Soft, IBM, Oracle, Google, and Amazon were all in the running for the $10B contract, which is not only the biggest internet technology contract in military history but also a foot in the door for the billions of dollars in federal spending on cloud computing expected over the next few years.

Despite objections from critics who called for the contract to be split among multiple contractors, the DOD decided the JEDI contract would remain a winner-takes-all award. 

And after Google dropped out for ethical reasons (the company has committed to not using AI to develop weapons), Microsoft and Amazon became the only contract competitors in April when the Pentagon declared that IBM and Oracle weren’t technically up to snuff.

Until recently, the force was strongest with Amazon

Amazon was expected to win the contract thanks to its dominant position in the cloud computing industry: ’Zon controls a 48% market share, compared to Microsoft’s 15.5% market share — and, unlike Microsoft, it already has the military’s highest level of data management certification.

But the skies darkened for Amazon’s cloud when President Trump — a widely known critic of Amazon chief Jeff Bezos — joined the chorus of voices complaining that Amazon’s aggressive pursuit of the JEDI contract had been anti-competitive.

Now it’s Amazon’s turn to strike back

Both IBM and Oracle have already lodged formal complaints about the JEDI bidding process, arguing that parameters of the contract stacked the deck in Amazon’s favor.

But now that Amazon has lost, Bezos’ Big Biz is considering its own appeal of the decision based on President Trump’s interference.

Either way, both Microsoft and Amazon are poised to profit from their relationships with the US military in the future: Amazon makes $2B in annual revenue from its contracts with the federal government, and Microsoft last year signed a deal to provide cloud computing to 17 government agencies.

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