Economy Amazon suspends Pentagon's mega-deal given to Microsoft

Amazon suspends Pentagon’s mega-deal given to Microsoft


Amazon has just scored a point in the battle against Microsoft to continue to dominate the cloud market. An American judge accepted his request Thursday to order the suspension of a mega-contract of the Pentagon, attributed to Microsoft at the end of October.

The e-commerce giant accuses President Donald Trump of influencing the defense ministry’s decision without regard for objective arguments. Arguments which, according to him, lean largely in his favor, whether in terms of experience or technology.

The JEDI (Joint Enterprise Defense Infrastructure) contract, worth $ 10 billion and spanning ten years, aims to modernize all of the computer systems of the American armed forces in a system managed by artificial intelligence.

Amazon filed a formal complaint in January, and a federal court on Thursday ordered a temporary injunction, barring the Pentagon from advancing on the deal, according to a summary of legal documents available online.

Microsoft and the Pentagon ‘disappointed’

‘We are disappointed with this additional delay, but we think that in the end we can go ahead and do the work necessary so that those who serve our country can use the new technologies they need, urgently’, reacted Frank Shaw, vice president of Microsoft in charge of communication.

“We have confidence in the Ministry of Defense, and we believe the facts will show that it conducted a detailed, substantiated and fair award process to reach the conclusion that Microsoft best served the needs of the combatants,” he added.

Also saying it is ‘disappointed’, the Pentagon regretted that this legal procedure unnecessarily delays the implementation of the modernization strategy of the Ministry of Defense and deprives the soldiers of a lot of capacities which they urgently need .

“We are confident in our choice of Microsoft for this JEDI contract,” added the ministry.


The judge clarified that Amazon must provide $ 42 million which will be used to cover damages if the injunction is ultimately found to be unfairly granted.

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As soon as the tender was concluded this fall, Amazon had strongly protested. This week, the group directly attacked the President and other senior ministry officials, demanding that they explain in person about the award.

“President Trump has repeatedly demonstrated his willingness to use his leadership as the Chief of the Armed Forces to interfere with government functions, including the awarding of federal contracts, for personal gain,” a spokesman for the ministry said on Monday. Amazon Web Services (AWS) division.

It refers in particular to remarks reported by James Mattis. The former US Secretary of Defense said Donald Trump told him to ‘send the Amazon to graze’ during a discussion on the contract.

Jeff Bezos, the boss of Amazon, is the frequent target of virulent attacks on the part of the republican president, in particular because of his investment in Washington Post, one of the newspapers among the most critical of Mr. Trump and his government .


For Amazon, the stakes are high: it is a question of continuing to dominate a sector that the Seattle firm has largely launched and which is experiencing very strong growth. In the fourth quarter of 2019, spending on cloud infrastructure worldwide jumped 37% in one year to $ 30 billion, according to research firm Canalys.

Amazon Web Services largely dominates the cake with 32% of market share over this period, but this figure is slightly down, while Microsoft, number 2, rose by 15 to 18%.

This contract ‘changes the game in favor of Microsoft with a ripple effect for years’, estimated Daniel Ives, in January. The Wedbush analyst thinks that Satya Nadella’s group is now well positioned to win a larger share than Amazon of ‘the next trillion dollars that should be spent in the cloud for the next ten years’.

But according to Bob O’Donnell of Technalysis Research, ‘a single project will not be enough to reverse the underlying trend’. “It gives Microsoft some momentum, that’s for sure, and that’s what Amazon is fighting for,” he said. “But the groups are too big for even a large contract to destabilize them.”




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