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After a very dramatic bidding process, U.S. Department of Defense last month awarded a $10 billion cloud computing contract to Microsoft.
It seemed like Amazon had the contract for the Joint Enterprise Defense Infrastructure, or JEDI, locked up, almost as though the bid had been written for that company specifically. But several competitors, including Oracle, claimed the process was rigged. President Donald Trump had made it clear that his preference was for a company other than Amazon, a not-so-surprising reveal, as he’s a consistent critic of Amazon founder Jeff Bezos.
Meanwhile, the Department of Defense said it needed to get this show on the road as a matter of national security.
I spoke with Patrick Tucker, technology editor at Defense One, a news site focused on that very topic. The following is an edited transcript of our conversation.
Patrick Tucker: This is by far the most juicy tale to come out of defense [information technology] in a very long time, because it involves these huge companies that are household names that are locked in a battle with big political overtones to reinvent the entire future of a big portion of the way the Defense Department does things. It actually is dishy, I think.
Molly Wood: Last time we talked, you said that when the specs for this proposal were written, Microsoft didn’t even have the technology. How surprising is it that Microsoft pulled off this come-from-behind, thrilling, last-minute victory?
Tucker: It’s not actually too surprising, because on the one hand, you’re absolutely right. When the specs were originally written, the entire objection to this contract was, “You’ve clearly written this for one company that can meet all of these incredibly difficult requirements.” Microsoft was not at the level of requirements that Amazon was, so the folks that wanted to destroy this contract made that point over and over again. While all of those guys were doing that, what Microsoft was doing was getting better. They reached the second-highest level of security, and they’ve been cementing relationships within the Defense Department, deal by deal. It’s an example of the tortoise beating the hare. Part of the reason that the hare lost was because the hare was a very politically volatile entity in this whole race.
Wood: Who is happy here and who’s not happy?
Tucker: Not happy are all of the little cloud providers that hated this, that were slinging mud at Amazon. They don’t win, but at the same time, neither does Amazon. So Amazon also, obviously not happy. They’re going to totally protest this. But the Amazon protest probably isn’t going to go anywhere because the requirements have been clearly published. All you have to do is look and see, “Well, did Microsoft meet those requirements?” And the answer is yes, much to the surprise of everybody. Over the last couple of years, they’ve built up their capabilities to actually do it. It probably isn’t going to derail anything.
Although Microsoft executives are celebrating the contract, it’s not all smooth sailing there either. Some employees at Microsoft protested the company even bidding for the contract. An open letter a year ago asked the company not to pursue the JEDI deal, but, in an interview published Monday, Microsoft CEO Satya Nadella said the company was still doing it.
In case you’re looking for a deep dive on cloud computing and the battle between Microsoft, Amazon and Alphabet and challengers like Oracle and IBM, The Wall Street Journal has a good article on how they’re all investing in something called a hybrid cloud. This is where some parts of a company’s business live on outside servers controlled by Amazon or Microsoft. They still store some data locally for more security and control.