Feb 24, 2020

Microsoft vs. Amazon vs. White House = Pentagon cloud project delay

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POTUS' and Jeff Bezos' beef potentially harms national security. The Pentagon and Microsoft are stuck in the middle of it.

The $10 billion Joint Enterprise Defense Infrastructure project, or JEDI, is designed to create a single cloud computing infrastructure for the U.S. military, but it’s on hold for now.

A little context: A controversial bidding process seemed to be a slam-dunk for Amazon. Other companies protested, President Donald Trump intervened, then the contract was awarded to Microsoft, which Amazon protested. Earlier this month, a judge stopped the Pentagon from moving forward while it all gets worked out.

I asked Patrick Tucker, technology editor at Defense One, if he’s surprised that a judge sided with Amazon for now. The following is an edited transcript of our conversation.

Patrick Tucker: I’m not surprised that they obtained this injunction. On the one hand, they do actually have a lot of good indication that there was some political influence in things that Defense Secretary Mark Esper may have said or done. There’s all of Donald Trump’s public statements, which do suggest there might be something. If you talk to folks in the Pentagon, they’ll tell you that “we’ve looked at this. And the thing is, as we created this idea, Microsoft can actually do it.”

Molly Wood: While this fight is happening, what are the stakes? The Pentagon has clearly successfully made the argument that they need to move forward with this consolidation. How big a deal and potentially risky are delays?

Tucker: It depends on who you ask. For instance, if you talked to Lt. Gen. Bradford Shwedo, the delays are very costly that they potentially harm national security. They are going to make it more difficult for operators that are potentially in real conflict situations to get data and send data as quickly as is possible for them to do. It’s actually well past time the Pentagon had an enterprise cloud solution. You’ve got a situation where Amazon is arguing against what it had previously said, and where the Pentagon says that it’s really time to get moving on this. Both are blaming the other for the delays, but both have a part in it.

Wood: What happens next? What’s the next chapter?

Tucker: As someone that talks to folks in the Pentagon, I feel pretty confident that either of these two major cloud providers would probably be fine. The question of undue political influence on military contracting, that’s something that’s within the public interest, and it’s something that the public should be talking about. It’s not something that you want. You don’t want to set a precedent where elected leaders are telling the Pentagon who they have to go with for a contract because that political leader has a favorite or an animus towards one provider or another. What’s next, hopefully, is we begin to get a window into whether or not that’s what actually happened here. And if there that’s what happened, then we have to talk about it.

Related links: More insight from Molly Wood

The Motley Fool suggested on Friday that the drama over the cloud contract could be a problem for Microsoft stock, since cloud services have provided so much of its growth lately. In fact, Amazon Web Services and Microsoft’s Azure platform are the top two cloud providers in the world. Amazon has 32% of the market as of the fourth quarter of last year, and Microsoft has just over 17% market share, though it’s been growing a lot faster. 

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Coming up all week in San Francisco is the RSA cybersecurity conference. Verizon, IBM and AT&T, along with about a dozen others, have withdrawn from the conference over concerns about the coronavirus. San Francisco has no confirmed cases. The mayor even put out a statement saying please do not contribute to an atmosphere of panic. I think we can agree it’s too late for that.

The team

Molly Wood Host
Jody Becker Interim Senior Producer
Stephanie Hughes Producer

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