The Force is Not So Strong With This One: Amazon appeals JEDI decision

January 14, 2020

2 min read

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What's going on here?

Amazon Web Services has filed against the Pentagon’s decision to award Microsoft the $10 billion JEDI (Joint Enterprise Defence Infrastructure) contract.

What does this mean?

The US Department of Defence’s (DoD) decision followed after a long delay due to concerns that the JEDI bidding process had been anti-competitive (to read more about this, check out our report here).  The JEDI contract aims to modernise the US military’s data and communication systems through the use of cloud storage and AI. 

Amazon claims that the decision has been influenced by political pressure from President Trump. Amazon’s appeal with the Court of Federal Claims cites comments made by the president which indicated bias against Amazon and its chief executive, Jeff Bezos. Bezos also owns The Washington Post, a major American newspaper well known for criticising Trump.

What's the big picture effect?

At the company’s annual conference, Andy Jassy, CEO of Amazon Web Services, publicly emphasised the effects of political pressure; “it makes it really difficult for government agencies, including the DoD, to make an objective decision without fear of reprisal”.

However, although Amazon was originally the frontrunner at the beginning of the bid, Microsoft has achieved a significant amount during the delay. In January 2019, Microsoft put its first foot into the military with a $1.76 billion contract with the DoD for software development services. In addition to this, Microsoft also obtained the necessary security clearance which was originally only awarded to Amazon. 

If Amazon loses its appeal, the company’s dominating market share of 47.8% may be under threat. Although Amazon is three times the size of Microsoft, the latter is quickly growing. With Pentagon’s approval of Microsoft, it sends a clear approval of Microsoft’s cloud services to the rest of the military which may lead to more lucrative government contracts.

Report written by Heerim Hwang

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