Microsoft beats Amazon to win the $10 Billion US Defense JEDI cloud contract

The US government has awarded a giant $10 billion cloud contract to Microsoft, the Department of Defense has confirmed. Known as Joint Enterprise Defense Infrastructure (JEDI), the contract will provide the Pentagon with cloud services for basic storage and power all the way up to artificial intelligence processing, machine learning, and the ability to process mission-critical workloads.

It’s a key contract for Microsoft as the company battles Amazon for cloud dominance, and for a while it was up in the air as to whether Microsoft or Amazon would win this particular one. IBM and Oracle were both eliminated for the bidding back in April, leaving just Microsoft and Amazon as the only companies that could meet the requirements. The contract has been controversial throughout the bidding process, and Oracle lost a legal challenge after it claimed the contract has conflicts of interest.

President Trump even got involved during the bidding process, saying the government was looking at the contract after “getting enormous complaints” from competitors to Amazon and Microsoft. Trump has been a critic of Amazon and its CEO Jeff Bezos over the company’s tax arrangements.

While the contract award, which will last for 10 years, will be seen as a big win for Microsoft, employees might not necessarily agree. Thousands of Google employees protested against the tech giant’s involvement in the Pentagon’s “pathfinder” AI program, known as Project Maven. Google was ultimately forced to step back from the work, and wasn’t part of the final bidding process for this contract.

Microsoft employees have also called on the company to drop its HoloLens US Army contract, which could eventually provide more than 100,000 of the augmented reality headsets for combat and training in the military. Microsoft is still honoring the contract, and the US Army are already using modified HoloLens 2 headsets for soldiers.

Big news: Microsoft beats Amazon to win the $10 US Defense JEDI contract – MSPoweruser

Most people in the industry were really surprised by this announcement as everyone was expecting Amazon to win the JEDI contract. This is a huge news for Microsoft Cloud platform. Even though $10 billion is a significant amount of money, the network effect that will be created for Azure through this contract will be more significant.

Big news: Microsoft beats Amazon to win the $10 US Defense JEDI contract – MSPoweruser

Amazon AWS team gave the following statement regarding Microsoft’s victory on the JEDI contract.

Big news: Microsoft beats Amazon to win the $10 US Defense JEDI contract – MSPoweruser

“We’re surprised about this conclusion. AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion. We remain deeply committed to continuing to innovate for the new digital battlefield where security, efficiency, resiliency, and scalability of resources can be the difference between success and failure.”

In terms of cloud tech capabilities, Amazon AWS was clearly ahead of Azure and even the contract requirements were designed specifically around AWS capabilities. The US DoD did not reveal any details on why it selected Microsoft over other cloud companies, especially Amazon AWS. My guess is “trust”. Amazon was accused of malpractices related to this contract process and because of which Defense Secretary reviewed the contract at the last moment. May be the Defense Secretary found something wrong about Amazon and decided to award the contract to only other player, Microsoft. We will get more details on this front in the coming weeks.