Trump, Amazon, and the $10 Billion Pentagon Contract

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Amazon claims Trump's 'personal vendetta' cost it $10 billion Pentagon contract


The Joint Enterprise Defense Infrastructure, or JEDI project is a cloud computing contract from the US Department of Defense worth an estimated $10 billion.

Big tech companies, like Google, Amazon, Microsoft, Oracle, and IBM, bid on the project, hoping to provide processing and storage services for massive quantities of classified data for this government department.

Amazon’s cloud services platform, Amazon Web Services, or AWS, was considered by many experts to be a frontrunner, due to the company’s dominance in the cloud computing space, where it provides the underlying architecture for somewhere between 3% and 50% of the internet (depending on how you measure it), and owns about 48% of the cloud computing service market—compared to 15.5%, 7.7%, and 4% for Microsoft, Alibaba, and Google, respectively.

In October, this contract was awarded to Microsoft, and now Amazon is claiming that this decision was based not on merit—which is often a legal requirement for government contracts in the US, hence, the lawsuit—but instead on anti-Amazon, anti-Jeff Bezos bias from President Trump.

Trump does have a history of very publicly attacking Bezos (the founder and CEO of Amazon) and the entities with which he’s associated, including the apparent source of Trump’s disdain: the large, daily American newspaper, The Washington Post.

The Washington Post was sold to Jeff Bezos in 2013 for about $250 million, and since then, he’s reportedly been completely hands-off in terms of telling them what to say or report upon; though it’s impossible to know whether there are less-obvious, covert means of utilizing such ownership for personal gain. All public indications are that Bezos did not buy a major newspaper paper to net himself favorable press or attack his enemies, though.

Trump’s beef with Bezos seems to have arisen in 2015, after the Post published a report on then-candidate Trump’s call for banning Muslim immigrants from the country. Trump posted an angry tweet in response:

The issue spiraled from there, resulting in a long-standing, mostly one-way feud, that’s expanded in scope to include many different complaints about the billionaire, ranging from his taxes to his company’s reliance on the US Postal Service for last-mile delivery functions.

For their part, Department of Defense representatives are claiming they haven’t been pressured to select any of the contract bidders: they selected Microsoft on its merits.

This lawsuit, then, is premised on a few key points:

  1. It was assumed by tech-world insiders that Amazon was the only company capable of providing the scale of service and level of security the DoD required.

  2. Trump has reportedly stated (to former Secretary of Defense, Jim Mattis) that he wanted to “screw Amazon” out of this contract, specifically.

  3. Trump has an outsized influence on many components of his administration, and the DoD is part of the Executive Branch, headed by a Secretary of Defense who was nominated by Trump, and who has followed Trump’s wishes in a few other cases.

None of which means this lawsuit is valid, or based on anything other than suspicion.

It’s possible that Trump would have loved to screw Amazon and Bezos out of this contract, but that he either couldn’t without exposing himself to impeachment-related issues, or didn’t have to, because Microsoft’s services have been catching up to Amazon’s for a while now, and they proved to be the better option, all things considered.

Of course, it’s also possible that this lawsuit is meant to serve purposes beyond achieving a legal victory.

If you’re the current market leader in cloud computing, and an upstart steps in and takes a very big, very public contract from under your nose—one that could allow you to stake out new work with other government agencies around the world, if you win it—it could make sense, strategically, to muddy the water so that you can claim it was bias that kept you from getting the job, rather than merit.

Such a move might help keep some of those future options open, despite the short-term loss of a big contract.


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