Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Amazon's position as cloud leader and Bezos' title as richest man could be threatened by Microsoft's JEDI contract

Amazon's position as cloud leader and Bezos' title as richest man could be threatened by Microsoft's JEDI contract

Amazon is considering its options for how to move forward following the decision to award a massive government contract to its competitor, Microsoft, according to a source familiar with the situation. One analyst said he "fully expects" Amazon to try to fight the decision in court.
The contract - called Joint Enterprise Defense Infrastructure, or JEDI - involves providing cloud storage of sensitive military data and technology such as artificial intelligence to the Department of Defense, and could result in a payoff of up to $10 billion over 10 years for Microsoft.

The contentious decision represents a major loss for Amazon (AMZN) and a boon to Microsoft, (MSFT) especially as both companies have seen the growth of their cloud businesses slow in recent months. It also threatens to undermine Amazon's position as the clear leader in the cloud industry and CEO Jeff Bezos' title as richest man in the world.

Friday's decision came after months of controversy and protest over the process for awarding the deal and President Donald Trump's public criticism of Amazon, long considered the frontrunner.

"This is a game changer deal for Microsoft to win as this will have a ripple effect for years to come and speaks to a new chapter of [Microsoft] wining in the cloud versus Amazon," Wedbush analyst Dan Ives said in a note to investors Saturday, adding that he thinks Amazon and others may challenge the decision in court.

The timing is especially painful for Amazon, which said it was surprised by the decision, calling itself the "clear leader in cloud computing." The company's stock was already down at the end of the week after it announced on Thursday a 28% drop in profits in the most recent quarter. At the same time Amazon is funneling money into speeding up its shipping capabilities, growth at its cloud services division, Amazon Web Services, is slowing. Amazon's stock fell nearly another 1% in after-hours trading over the weekend.

Amazon Web Services has long been a key income driver for the company, generating a relatively small percentage of Amazon's sales but a majority of its profits. And an additional $1 billion a year would have been a significant boost - AWS generated $25.7 billion in annual revenue last year.

Those big sales are thanks in no small part to AWS's government and other public sector clients, including 5,000 government agencies and 10,000 academic institutions. It became the leader in government cloud contracts by seeking out federal business early on and becoming the first to achieve various security and procurement qualifications. In 2013, it received a breakthrough $600 million contract to provide cloud services to the CIA.

But maintaining its dominance required hanging onto those government deals, something Amazon failed to do with JEDI.
The loss of JEDI will likely hit Jeff Bezos directly and could cause him to again fall behind Microsoft founder Bill Gates as richest man in the world. Bezos owns roughly 57 million shares of Amazon - around 12% of the company. Compared to the beginning of last week, Bezos' net worth has fallen more than $1 billion because of the effect of the tough earnings report and JEDI contract decision on Amazon's stock.

Amazon likely wasn't helped by Trump's dislike of Bezos and the Washington Post, which he owns.

A new book written by the speech writer for former Defense Secretary Jim Mattis says that Trump called Mattis in the summer of 2018 and directed him to "screw Amazon" out of a chance to bid on the contract, according to the website Task and Purpose.

Mattis declined to do that, according to the book. In June, Trump said his administration would carefully review the Pentagon's contract plan after he said Amazon competitors, including Microsoft, complained about the process.

"The acquisition process was conducted in accordance with applicable laws and regulations," the Department of Defense said in its announcement of the contract Friday. "All offerors were treated fairly and evaluated consistently with the solicitation's stated evaluation criteria."

The Department did not immediately return a request for comment Sunday.

Wedbush's Ives said he projects the deal will ultimately add $10 per share to Microsoft's stock.

"We brought our best efforts to the rigorous JEDI evaluation process and appreciate that DoD has chosen Microsoft," Toni Townes-Whitley, Microsoft's president of US regulated industries, said in a statement to CNN.

There are likely more big government deals to come. The Department of Defense on Friday said "additional contracting opportunities are anticipated."

Gartner analyst Craig Lowery has estimated that just around 10% of the federal government has transitioned to the cloud. Ives said the market opportunity in providing cloud services to the DoD and other government agencies could reach $100 billion in the coming years. And now, Microsoft may have a leg up against Amazon in securing more of that business.

"We believe Microsoft and [CEO Satya] Nadella are popping the champagne tonight ... while Bezos and Amazon are likely shocked they lost the World Series of cloud deals with JEDI," Ives said.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
Thirteen Killed in Russian Attacks Across Ukraine
High-Profile Incidents and Political Developments Dominate Global News
Netanyahu Accuses Western Leaders of 'Emboldening Hamas'
Ukraine and Russia Conduct Largest Prisoner Exchange of the War
×