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Microsoft wins $10bn Pentagon cloud contract, beating Amazon

Microsoft wins $10bn Pentagon cloud contract, beating Amazon

Microsoft and Pentagon agreed on the new $10 billion deal, Luxembourg Times reports. The IT-giant will create and maintain the cloud service JEDI for the US Defence ministry.

Bill Gates’ Microsoft has won the sought-after Joint Enterprise Defense Infrastructure (JEDI) cloud computing contract with the Pentagon valued at as much as $10 billion over a decade. Microsoft’s rivals were Amazon and Oracle, of course.

The cloud project JEDI is intended to help bring American military technology into the modern era.

The US Defense Department has announced its decision on late Friday, and President Donald Trump weighed in on the bidding process, according to the insiders.

Jeff Bezos and Bill Gates are the two richest men in the world, according to the Bloomberg Billionaires Index. But Microsoft shares rose 0.6% to $140.73 at Friday’s close while the Pentagon said the contract was expected to be completed by 2029.

Pentagon invests in commercial clouds

The American Defense Department needs huge and remote data centres, thus, the cloud idea is perfect. Pentagon continues to invest in commercial cloud services, which host computing power and storage in remote data farms. That approach allows to improve data security and speed up real-time sharing of information across the military.

“We’re surprised about this conclusion,” said Douglas Stone, an Amazon spokesman. Bezos’ corporation was believed to be the front-runner until Friday evening. Undoubtedly, the decision is a big boost to Microsoft’s cloud business.

This is a paradigm changer for Microsoft, the analysts said. It’s a landmark win that will change the cloud computing battle over the next decade.

In a statement released later Friday night, the Defense Department said that “the acquisition process was conducted in accordance with applicable laws and regulations. The process cleared review by” the US General Accounting Office and the Court of Federal Claims.

“All offerors were treated fairly and evaluated consistently with the solicitation’s stated evaluation criteria,” the department added, saying that “additional contracts are planned for both cloud services and complementary migration and integration solutions necessary to achieve effective cloud adoption.”

As recently as Tuesday, the Pentagon said Defense Defense Secretary Mark Esper had recused himself from any decisions involving the contract to avoid the appearance of a conflict of interest because his son works with one of the original applicants.

IBM confirmed that Esper’s son has been a digital strategy consultant with the company since February but said that his job was “unrelated to IBM’s pursuit” of the cloud deal.