EMAILED ON May 22, 2018 BY Conor Grant

Racing Amazon for JEDI contract, Microsoft gives US intelligence a seat on its cloud

Microsoft just signed a deal to offer a new version of its cloud computing platform, called Azure Government, to 17 US intelligence agencies.

This is an expansion of their current contract, as part of their quest to win all the marbles: the Pentagon’s winner-takes-all Joint Enterprise Defense Infrastructure (JEDI) contract.

The Washington Post says Microsoft execs see the new contract as an “awakening” — and they’re hoping the intelligence community will be “woke” enough to skip over frontrunner Amazon for the JEDI bid.

Heating up, the cloud wars are

The US government doled out $2.3B to cloud-computing partners in 2017, an amount expected to increase 20% annually through 2022 — making cloud contracts a hot commodity for old-guard defense companies and tech giants alike.

And, the upcoming $10B JEDI contract is the largest in DoD history — juicy enough to get Microsoft, Oracle, IBM, Amazon and 42 competitors to toss their clouds into the ring.

There will only be one last JEDI

While Microsoft has contracted for the DoD before (it signed a $927m, 5-year IT contract with them in 2016), it has only ever handled unclassified data. Amazon, which won a $600m CIA contract in 2013, is the only tech company to handle classified data on cloud servers.

Moreover, Amazon’s cloud tech dominates the digital sky with 44.2% market share (the next biggest are Microsoft’s at 7.1% and Google’s at 2.3%) — giving it an advantage over its low-clearance competitors.

Keeping it classified does NOT mean keeping it classy

Since the DoD announced it would pick only 1 JEDI, competing clouds have warned of an unfair Amazon advantage.

In April, Oracle created a coalition with IBM and Microsoft to lobby Uncle Sam to split the deal into a multi-cloud contract and spread the wealth. Later, when the DoD awarded a $950m to an Amazon cloud partner, Oracle sued — successfully downgrading the deal to $65m.

The government will likely announce the JEDI winner by September, and you can bet the contenders already have their lawsuits locked and loaded… unless they win, of course.