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Microsoft's Pentagon cloud contract win opens new political battles

A ethernet cable being plugged into the Pentagon.
Illustration: Lazaro Gamio/Axios

Friday's announcement that the Defense Department chose Microsoft over Amazon for a huge cloud computing contract will set two new battles in motion — one procedural and one political.

Why it matters: Amazon's lawyers will likely challenge the decision, while 2020 Democratic candidates will line up to charge the Pentagon with putting its hand on the scales to please President Trump.

The big question: What degree did politics play a role in Microsoft's win?

  • Trump's animus toward Amazon and Jeff Bezos is well documented.
  • A new book reports that Trump told former Defense Secretary Jim Mattis in summer of 2018 to "screw Amazon" out of the deal.
  • Mattis reportedly rebuffed the president — but he's gone now, and Amazon lost.

For Microsoft, the huge victory is also likely to renew debate among employees over the company's government work, particularly defense and immigration contracts.

  • Microsoft President Brad Smith has made it plain that the company will continue doing work with all parts of the government, including the military.
  • One new issue: Microsoft invested in an Israeli startup that uses facial recognition for surveillance of Palestinians in the West Bank, according to NBC News. "If we discover any violation of our principles, we will end our relationship," the company told NBC.

An Amazon challenge seems inevitable — and it might even get a boost from Congressional investigators.

  • "It's crystal clear here that the president of the United States did not want this contract to be awarded to one of the competitors," Franklin Turner, an attorney with the law firm McCarter & English, told the Washington Post. "It's a virtual guarantee that Amazon is going to pull out all the stops to check the government's math on this one."

What they're saying:

  • Microsoft: "We brought our best efforts to the rigorous JEDI evaluation process and appreciate that DOD has chosen Microsoft. We are proud that we are an integral partner in DOD's overall mission cloud strategy."
  • Amazon, per GeekWire: "We're surprised about this conclusion. AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly leads to a different conclusion."
  • Conservative lawyer and Trump critic George Conway, on Twitter: "This is impeachable."
  • Box CEO Aaron Levie, on Twitter: "Cloud computing. Government procurement conspiracies. Revenge. For all of us in enterprise software, this is about as exciting as it gets."

Between the lines: The contract, a 10-year deal to put a big chunk of the Defense Department's current and future computing needs into the cloud, was controversial even before this point.

  • The Pentagon's choice to go with a single vendor rather than multiple providers drew complaints last year from critics who said it favored Amazon.
  • The Defense Department's criteria led to both Oracle and IBM being declared out of the running. Google withdrew as well.
  • Some GOP congressmen had also asked the president to delay the awarding of the contract until the possibility of a pro-Amazon bias could be further investigated.
  • Microsoft, for its part, tried to keep its head down and add required capabilities and certifications to its cloud systems — a number of which it didn't have 18 months ago — in order to be eligible to win the bid.

My thought bubble: The decision is yet another sign that Microsoft is winning the techlash.

The bottom line: By politicizing an essentially bureaucratic and technical decision with his attacks on an individual company, Trump insured that this process would be a mess — and a no-win choice for the Pentagon.

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