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Amazon Takes Pentagon to Court Over $10 Billion Cloud Contract to Microsoft

US Appeals Court Says Amazon Can Be Held Liable for Products from Third Party Sellers

In the latest development, Amazon Inc is pursuing legal action against Pentagon for awarding a $10 billion cloud contract to Microsoft Corp, its competitor. The deal has raised a lot of dust since it was awarded to Microsoft.

Amazon has initially pointed out that it was going to lodge a complaint about awarding Microsoft the contract, arguing that the deal was politically motivated. The company filed the lawsuit barely a week after indicating its displeasure over the nature of the deal.

Amazon suggested that the pentagon should have awarded the contract for JEDI, instead of awarding the project to its direct competitor.

Interestingly, Amazon’s Powerhouse web service was considered for the deal because it has developed a cloud-based service for the CIA in the past. However, the Pentagon decided to choose Microsoft instead.

Deal politically motivated, according to Amazon

Drew Herdener, Amazon’s spokesman, pointed out that it is critical that the government award contracts not based on sentiments or political influence. The Government and its administrators should be free and fair in whatever dealings they are having with institutions. He reiterated that it would be unfair to systematically give advantage to a particular group, knowing that other competitors will be at a disadvantage.

Amazon Takes Pentagon to...

He said that the JEDI evaluation by the pentagon was not successful because, according to him, there were unmistakable bias, errors, and clear deficiencies. It is vital that these errors are rectified after the reexamination. The JEDI project is still the most viable option for the pentagon, and should be given more attention, Herdener continued. Amazon has refused to make further statements on the deal, pointing that its statement last week was enough.

Microsoft has a different view

However, Microsoft had another view regarding how the deal went. A Microsoft spokesman said the Microsoft team is confident that the DOD was diligent enough when analyzing the award process for the deal. The team at Microsoft believes that DOD ran a thorough examination and went through everything in detail before finally making their decision. He said that it is evident that the defense ministry went through a fair process and was convinced that Microsoft would best meet the needs of the warfighter.

Currently, there are two appeals from Oracle and Amazon on the deal. Oracle is appealing a case ruled against its claims on the cloud contract in July. The court challenge will now delay the takeoff of the cloud technology program the DOD regards so highly.

A lot is at stake here

Apart from the immediate benefits of the contract to the awarded entity, there is more at stake. The award to Microsoft can yield multiple benefits that can last for many years. According to Daniel Ives, a security analyst at Wedbush, Both Microsoft and the government stand to gain a whole lot, even beyond ten years from this deal.

The positive ripple effect of the deal is the reason why both Oracle and Amazon are filing a case against the Pentagon. It could give Microsoft an undue advantage over both companies. It could swing the leadership of cloud technology in favor of Microsoft. And to Amazon, the government is unfairly trying to help Microsoft achieve this.

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Ali Raza

A journalist, with experience in web journalism and marketing. Ali holds a master degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.