Pentagon hands Microsoft $10B 'war cloud' deal, snubs Amazon
FOX Business' Deirdre Bolton reports on Microsoft's earnings and how its stock reacted. FOX Business' Connell McShane as well as 'After the Bell' panel, including Capitalist Pig hedge fund member Jonathan Hoenig, Altium Portfolio manager Michael Lee and Lifewire.com editor-in-chief Lance Ulanoff react.
SAN FRANCISCO (AP) — The Pentagon has awarded Microsoft a $10 billion cloud computing contract, snubbing the early front-runner Amazon, whose participation drew criticism from President Donald Trump, among others.
Bidding for the huge project, known as the Joint Enterprise Defense Infrastructure, or JEDI, pitted leading tech titans Microsoft, Amazon, Oracle and IBM against one another.
The giant contract has attracted more attention than most, sparked by speculation early in the process that Amazon would be awarded the deal. Tech giants Oracle and IBM pushed back with their own bids and also formally protested the bidding process last year.
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Oracle later challenged the process in federal court, but lost.
Trump waded into the fray in July, saying that the administration would "take a very long look" at the process, saying he had heard complaints. Trump has frequently expressed his ire for Amazon and founder Jeff Bezos, who also owns the Washington Post. He said at the time he had heard from companies that the contract "wasn't competitively bid."
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The JEDI system will store and process vast amounts of classified data, allowing the U.S. military to use artificial intelligence to speed up its war planning and fighting capabilities.
The Department of Defense emphasized in an announcement that the process was fair and followed procurement guidelines. It noted that over the past two years, it has awarded more than $11 billion in ten separate cloud-computing contracts, and said the JEDI award "continues our strategy of a multi-vendor, multi-cloud environment."
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The statement appeared designed to address previous criticism about awarding such a large deal to one company.
Over the last year, Microsoft has positioned itself as a friend to the U.S. military. President Brad Smith wrote last fall that Microsoft has long supplied technology to the military and would continue to do so, despite pushback from employees.
Oracle and IBM were eliminated earlier in the process, leaving Microsoft and Amazon to battle it out at the end.
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"It's a paradigm changer for Microsoft to win JEDI," said Dan Ives, managing director of Wedbush Securities. "And it's a huge black eye for Amazon and Bezos."
The deal is a major win for Microsoft's cloud business Azure, which has long been playing catch-up to Amazon's market leading Amazon Web Services.
Microsoft, Amazon, Google and other tech giants have faced criticism from their own employees about doing business with the government, especially on military and immigration related projects.
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Microsoft and Amazon did not immediately respond to a request for comment.