JEDI battle in the cloud

Amazon and Microsoft are in the final stages of competing for a 10-year contract for the U.S. military’s new cloud computing system.

The Pentagon hopes to award the winner-take-all contract, known as JEDI, as early as Aug. 23.

Amazon has long been considered the favorite, but some analysts believe Microsoft has a chance of pulling an upset. While Amazon already has experience storing classified U.S. data because of its existing partnership with

the Central Intelligence Agency, security researcher Matt Suiche says Microsoft has a stronger suite of security products.

The government’s choice was simplified this month when a federal judge tossed out a legal

challenge accusing the Pentagon of rigging the bidding process in Amazon’s favor. That freed up the Pentagon to

focus on each finalist’s technical merits, though there are still rumblings from some members of Congress who want to restart the bidding process.

Synovus analyst Dan Morgan says the deal is big enough to likely affect stocks for both the winner

and the loser.

That’s not to say the $10 billion deal will be immediately vital to either company’s bottom line. Amazon Web Services, which leads the cloud infrastructure

market, made $25.7 billion in

sales last year. But Morgan and

other analysts say the Defense Department’s stamp of approval could significantly boost the winner’s reputation as a trusted cloud provider and result in more customers down the road.