After a long and difficult bidding process, Amazon has lost out to Microsoft in the battle to win a $10bn (£8bn) US Defence Department AI and Cloud computing contract.
The contract was for the Joint Enterprise Defence Infrastructure (Jedi). This infrastructure will be designed to enable US forces to get fast access to important Cloud-held data from whichever battlefield they are on. The project will also see AI being used to enhance and speed up the delivery of data to US forces, thereby potentially giving them an advantage.
Amazon Was Thought To Be In Front…Before Trump Comments
Amazon, led by Jeff Bezos, was believed by many tech commentators to have been the front-runner of the two tech giants in the battle for the contract as it is the biggest provider of cloud-computing services. Also, Amazon had already won an important computing services contract with the CIA in 2013 and is already a supplier of cloud services and technologies to thousands of U.S. agencies.
Unfortunately for Amazon, in August the Pentagon appeared to put the brakes on the final decision-making process following concerns expressed by President Trump.
The President is reported to have said back in July that he was concerned about the contact not being “competitively bid” and that he had heard “complaints” about the contract with Amazon and the Pentagon.
The President, however, was not the only one with concerns as tech giant Oracle (which was also in the running for the contract at one point) had gone to the federal court earlier in the year with allegations (which were dismissed) that the bidding process had been rigged in Amazon’s favour.
Many media reports have suggested that a difficult relationship between President Trump and Jeff Bezos in the past has possibly had some influence on the outcome of the Pentagon’s decision about the project. For example, Mr Bezos has been criticised before by President Trump, and Mr Bezos also owns the Washington Post. President Trump has been critical of several news outlets, such as CNN, the New York Times, and The Washington Post. For example, it has been reported by the Wall Street Journal that President Trump has now instructed his agencies not to renew their subscriptions to those newspapers.
Great News For Microsoft
Winning the contract is, of course, good news for Microsoft which will receive a large amount of U.S. Defence funds for the Jedi contact, and possibly for another defence -related multi-billion-dollar contract (‘Deos’) to supply cloud-based Office 365.
What Does This Mean For Your Business?
With a contract of this value up for grabs and the possibility of further lucrative contracts too, this was never going to be a clean and uncomplicated fight between the tech giants. In this case, however, it being a defence contract, one of the key influencers was the U.S. President and it appears that his relationship with Amazon’s Jeff Bezos along with other factors may have played a part in Microsoft coming out on top. The size and complexity of the contract meant that it was only ever going to be something for the big, established tech names, and Microsoft winning the contract was undoubtedly an important victory against its competitor Amazon, will add value to its brand, will bring in a sizeable source of revenue at a time when it’s already seen a 21 per cent rise in its profits on last year, and puts Microsoft in a much closer 2nd position behind Amazon’s AWS in the cloud computing services market.