Microsoft beats out Amazon, others for Pentagon contract

SAN FRANCISCO — The Pentagon on Friday 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 project, known as the Joint Enterprise Defense Infrastructure, or JEDI, pitted leading tech titans Microsoft, Amazon, Oracle and IBM against one another.

The 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.

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 after 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 that he had heard from companies that the contract “wasn’t competitively bid.”

The cloud 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 Friday’s award “continues our strategy of a multi-vendor, multi-cloud environment.”

Over the past 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.

“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 and Amazon did not immediately respond to a request for comment.