The Pentagon has announced that it is calling for the suspension of the $10 billion JEDI contract that Microsoft and Amazon were competing with each other for. The contract had been awarded to Microsoft in 2019 but Amazon filed a complaint, saying that former US president Donald Trump had inappropriately influenced the tendering process and the award.
Trump was a known critic of Amazon and its CEO, Jeff Bezos. The Pentagon noted in a statement released to news outlets that it was calling off the deal due to “evolving requirements, cloud conservancy, and industry advances.” Nonetheless, the Pentagon noted that it is open to a new proposal for a new cloud computing contract dubbed the Joint Warfighter Cloud Capability.
The government agency added that both Microsoft and Amazon are more than welcomed to apply. The decision by the Pentagon comes amidst an ensuing legal battle between two of the biggest tech giants in the United States. Although the Department of Defense issued a valid reason why it decided to cancel the deal, many feel that the tussle between Amazon and Microsoft must have played a part. It’s also not clear if former president Donald Trump was involved in the process.
Trump had accused Amazon of unfair business practices but most analysts felt that the criticism by the White House was nothing but political posturing. There is no evidence though Trump was in any way involved but based on the way he ran the White House during his four-year presidency, it won’t be a surprise to learn that he may have tried to influence the award. But that is water under the bridge now.
Both Microsoft and Amazon will not be getting the JEDI deal but instead, they are going to fight it out once more in a bid to get yet another lucrative deal from the Pentagon.
As soon as news of the cancelation broke out Microsoft stocks were down albeit they rebounded later in the day. Microsoft and Amazon are two of the leading cloud computing service providers on the planet. The companies account for a huge portion of the market.
It is expected that the showdown we saw with the JEDI contract will be repeated once again with the new plans by the Pentagon to bring in a new cloud contractor. Although it is likely there will be bids from other companies like Oracle, at the end of the day, it will come down to Amazon and Microsoft. Nonetheless, most experts see the cancelation as a win for Amazon.
Besides, some feel that the awarding of the initial JEDI contract to Microsoft raised many questions. Amazon was believed to have put in a better proposal and is after all the market leader when it comes to cloud service.
You'd think the company stands a better chance to bag this deal soon. But Microsoft will put up a good fight. The Windows giant has improved its cloud services massively in recent years and will feel confident of winning a second time.