- Amazon had been favored over Microsoft to win the JEDI contract for the Pentagon’s $10 billion cloud computing platform.
- But an analyst says Oracle’s aggressive challenge to the bid process may have inadvertently boosted Microsoft’s chances.
- Oracle had filed a suit accusing Amazon of using job and bonus offers in the bidding process, which Amazon has denied.
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The US Defense Department will soon announce the winner of one of the biggest cloud computing deals in history, with Microsoft and Amazon battling it out for the $10 billion contract.
Amazon, whose Amazon Web Services is the dominant cloud player, has been considered the likely winner of the Pentagon’s Joint Enterprise Defense Infrastructure (JEDI) project, a platform that will store and manage sensitive military and defense data. But an analyst said the tide has shifted in favor of Microsoft, partly because Oracle launched an aggressive bid to be reconsidered for the project.
"A year ago, Amazon was about to pop the champagne about the deal," Wedbush analyst Daniel Ives told Business Insider.
Referring to Microsoft CEO Satya Nadella and Oracle founder Larry Ellison, he added. "I think the tide has turned in the direction of Nadella and Redmond. … The irony is that Nadella’s best friend in the JEDI deal has probably been Oracle and Ellison."
Oracle vs Amazon
When Amazon seemed like a shoo-in to win the contract, Oracle went on the offensive, filing formal protests. Its CEO Safra Catz even reportedly tried to dine with President Trump In the end, it launched a legal challenge, suggesting that Amazon used inappropriate tactics in the bidding process.
In April, Amazon and Microsoft were named finalists for the Pentagon’s plan to create a massive cloud computing platform for the US military. This is a winner-take-all contract worth up to $10 billion over 10 years. Despite the fact that Oracle was no longer in the running, the company didn’t drop its suit.
"JEDI is riddled with improprieties," Oracle’s lawyers contended in lawsuit documents. "AWS made undisclosed employment and bonus offers to at least two DoD (Dept. of Defense) JEDI officials."
Amazon Web Services has denied the accusations, telling Business Insider last month that Oracle’s complaint is "wildly misleading and a desperate attempt to smear the company by distorting the facts."
An Amazon Web Services spokesperson on Tuesday declined to comment "due to ongoing litigation."
Amazon had been considered the early favorite to win the Pentagon contract partly because it had already secured a $600 million cloud contract from the Central Intelligence Agency in 2013.
Ives, who has an outperform rating on Microsoft and does not cover Amazon, said the Oracle complaint delayed and "added noise" to the process by highlighting "conflict of interest charges" against Amazon. That ended up giving Microsoft more time to campaign for the contract.
More time for Microsoft
Microsoft officials "flexed their muscles," mounting a strong campaign for the contract over the past year, including a robust lobbying effort in Washington, DC, Ives said.
"They had a lot of ground to make up versus AWS," he said. "The vast majority of this has been Microsoft gaining traction. They significantly enhanced their focus within the Beltway and K Street in making sure that the Pentagon isn’t just looking at AWS as a shoo-in."
"Microsoft had a 20% to 30% chance a year ago," Ives said. "Today, it’s 55%."
Elissa Smith, spokesperson for the Department of Defense, told Business Insider the JEDI award "will not be made until at least August 23." The Pentagon has also begun preparing to rollout the the JEDI project, even as it still faces a legal challenge from Oracle, according to a Bloomberg report.
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