BBC News Mundo
Since it was convened two years ago, the contract for the development of the digital cloud of the U.S. defensive system had become one of the most appealing contracts for technology companies in the world.
And even though the favorite to get it was Amazon, the internet sales giant that’s owned by Jeff Bezos, Microsoft finally took over the business.
The contract to create the Defense Infrastructure Joint Venture (Jedi) has an estimated budget of US$10 billion and is intended to make the Department of Defense much more skillful and advanced in terms of technology and digital.
Amazon stated “surprised” by the decision and clarified in a statement that “an analysis focused only on comparing offers would have led to a different conclusion.”
Bezos’s company, which has 10 days to appeal the decision, further noted that it is evaluating its options after the verdict on Microsoft’s behalf is known.
From the outset, Amazon Web Services, a department within Amazon specializing in these services, was considered the favorite to keep the Jedi contract – the largest in digital technology in US army history. U.S.-, because it has a wider data storage capacity.
In fact, Amazon controls nearly 40% of the industry in the U.S., while Microsoft only reaches 15%.
For example, all Netflix content is hosted within Amazon’s systems and for years Bezos’ company has also offered a similar service to the CIA.
But Bezos, in addition to owning Amazon, owns The Washington Post, which has maintained a very critical line with President Donald Trump, who constantly crosses him out of “fake news.”
So Trump has extended the attacks to the newspaper owner, Bezos, and his biggest company, Amazon. Several analysts point out that Trump’s confrontation with Bezos may have influenced the decision.
But the Pentagon noted that it had offered a “fair deal” to each of the contestants, including Oracle and Google (although oracle withdrew a year ago).
Microsoft CEO Toni Townes-Whitley said he was “proud” of what the company had achieved.
“We are proud of Microsoft that the Department of Defense has chosen our digital cloud technology to meet the urgent and critical current needs of combatants,” he said.
How did Microsoft get the contract?
The Department of Defense wants to replace its old computer network with a simple and unique digital cloud system, where it can control its contents.
Under the contract, Microsoft will need to provide intelligence-based analytics and host and manage classified military secrets, among other services.
Jedi is expected to give the U.S. military better access to information from any battlefield in the world.
And this is where the decision becomes controversial: Amazon Web Services has been doing that job for a few years now.
But Trump’s questioning not only for Amazon but also about the contract award process would have played in Microsoft’s favor.
“I’ve received strong complaints about the Pentagon contract and Amazon’s aspirations,” the U.S. representative said last July.
That’s why many analysts pointed to President Trump as responsible for Amazon not getting the award.
“It’s clear that the president of the United States didn’t want this contract awarded to one of the competitors,” Franklin Turner, a lawyer at McCarter & English, told The Washington Post.
“As a result, we are quite likely to see a number of complaints and appeals to the decision based on the process not taking place on an equal footing,” he added.
Dan Ives, manager of Wedbush Securities, who also points out that it will be a “paradigm shift” for Microsoft, agrees on this.
The award of a contract of this magnitude will boost Microsoft’s share price and “bring positive financial implications for the company in the years to come,” Ives told the BBC.
Amazon is disappointed to have lost this contract, especially after being considered the favorite.
But after President Trump’s comments that he received “tremendous complaints” about Amazon’s favorite status in July and following the subsequent delay in announcing the award, it seemed that Microsoft could get the contract.
And it is curious that this happened just after the Secretary of Defense, Mark Esper, unexpectedly withdrew – himself – from the award process, after spending months involved in it.
The reason he gave was that his son worked for IBM, one of the offering companies.
This decision further means that Microsoft becomes a large beneficiary of Department of Defense funds.
Because not only will he benefit from Jedi, but he will also take over another contract known as Deos.
Although the project has had its delays, it involves Department of Defense employees using Office 365, which is in the cloud, for their email, calendar, video call, and other tasks.
But Microsoft will have to deal with the problems that will bring it its new closeness to the armed forces.
Some of its employees have refused to develop a version of their augmented reality project for U.S. army use and the idea that a learning service and other systems – which help “improve the military’s deadly capacity” – is now being provided could be fatal to Microsoft’s public relations.
However, if it becomes true that Amazon lost this contract because Bezos owns The Washington Post, it could feed requests for Amazon Web Service to become a separate Amazon company.
This, in order to avoid the concern that market regulators have about the already wide reach of the “Amazon Empire” in the lives of Americans.
