Oct 28, 2022 - Technology

Google goes all in vs. Microsoft over lucrative federal contracts

Illustration of Google's logo with the Washington Monument replacing the "l".

Illustration: Shoshana Gordon/Axios

Google is squaring off again against familiar competitors like Microsoft and Amazon — but this time it's for lucrative contracts with the federal government.

Why it matters: Google sees an opening to chip away at Microsoft's dominance in federal government contracting, to keep making more money off its Cloud service and to nip at the heels of its other main competitor, Amazon Web Services.

  • Google is already battling Microsoft on a number of fronts over tech antitrust issues and gaming.

Driving the news: Google's cloud and public sector arms are aggressively trying to market their cloud and workplace services as they vie for a Pentagon cloud computing contract, the Joint Warfighting Cloud Capability, which is set to be awarded before the end of the year.

  • Google wants governments to use its products, from artificial intelligence and data analytics to standard email services and document-sharing, boasting of faster, more nimble and more secure systems than the competition.

State of play: Cloud is key to Google right now, as Google's earnings report this week showed lower-than-expected revenue as digital advertising craters. Its Cloud had a 38% year over year increase in growth, posting $6.9 billion in revenue, though it still trails behind rivals AWS and Microsoft Azure.

Flashback: In June, Google Cloud announced a new Google Public Sector division to "focus on helping U.S. public sector institutions—including federal, state, and local governments, and educational institutions—accelerate their digital transformations."

  • "The government has asked for more choice in cloud vendors who can support its missions, and protect the health, safety, and security of its citizens," Google Cloud CEO Thomas Kurian wrote at the time.

The big picture: Google's full-throated embrace of public sector work and attempts to edge out incumbent Microsoft marks an evolution for the company that once faced employee uproar over a Department of Defense contract known as Project Maven.

  • Google backed away from its AI work with the Pentagon in 2018 after employee outrage about the company's involvement in Project Maven, a military project that analyzed video and images to improve targeting in drone strikes.

What they're saying: "We've actually had a commitment to serving the government for quite a while, but now we've just really accelerated the focus," Google Public Sector CEO Will Grannis told Axios.

  • Grannis said Capitol Hill, the Defense Department and state and local governments were looking for "unequivocal commitment, and we've delivered on that."

Details: A key part of Google's strategy leading up to the creation of the new public sector subsidiary has been aggressively drawing attention to Microsoft's cybersecurity flaws to sway more government customers.

  • In March, Google Cloud released a survey of both government and D.C.-area workers that was headlined: "Government workers say Microsoft tech makes them less secure."
  • Following the discovery of the SolarWinds intrusion, Google lobbied lawmakers to further scrutinize Microsoft over the cybersecurity issues that played into the campaign, per Politico.
  • Google's also backing a bill introduced by Gary Peters (D-Mich.) last month aimed at requiring government software vendors, like Microsoft, to make it easier for their software to interact with competitors.

So far, standing up Google Public Sector — and pointing out competitors’ flaws — has helped Google secure contracts at the Pentagon, Commerce Department and state entities like the New York Cyber Command.

Yes, but: Beside the contract wins, many in Washington's tech and cyber communities aren't sure why Google is so aggressively pushing further into government work now, and are doubtful the company can so easily brush off past perception problems.

  • "Everyone has noticed Google is upping the noise level on cloud and the federal side of things," one tech industry lobbyist told Axios.
  • "I can't imagine their Project Maven problems have gone away, but they seem to be acting like that's no longer a problem."

The bottom line: Google says it is fully in when it comes to pursuing government work.

  • "When we launched Google Public Sector, we were very clear that we wanted to help accelerate the digital transformation of the U.S. government," Grannis said.
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