Amazon shares spike after Pentagon scraps $10bn Microsoft deal

Amazon will seek to bid for a US government contract worth $10 billion after the Pentagon concluded its current deal with Microsoft no longer met its current needs due to the “shifting technology environment”.

The Pentagon had previously awarded the bumper contract to the Amazon Web Services (AWS) rival in 2019.

It was later revealed that Trump in a book written about Mattis that Trump has instructed his team to “screw Amazon” out of a chance to bid on the contract.

This then led to Amazon filing for an injunction to halt the deal and filed court documents seeking to depose President Donald Trump, US defense secretary Mark Esper, former defense secretary James Mattis and four other “individuals who were instrumental” in ensuring the lucrative “JEDI” contract was awarded to Microsoft and not Amazon.

The Pentagon has now announced that it will give the two tech titans the chance to share the deal.

AWS will now be invited to the submit a new proposal to the US Defence Department to win a share of the multibillion dollar contract.

The revised deal, coined the “Joint Warfighter Cloud Capability”, will be awarded to multiple companies and while last for five years.

READ MORE: Amazon wins landmark injunction halting $10bn US defense contract with Microsoft

The US government has also said it will invite other cloud-service companies including Alphabet Inc. and IBM to apply for shares of the deal after conducting talks to determine whether they are eligible.

“This could be categorized as a win for Amazon because it gets them back in the game, but for both companies, now they got to go win on the streets,” Washington-based consulting firm Stan Soloway told Bloomberg.

Amazon was widely expected to win the contract when it was initially auctioned in 2019 as it had previously landed a cloud deal from the CIA in 2013 which had given the company top-level federal security authorisations.

The US Defence Department has claimed it needs to adopt commercial cloud services to give it tactical edges on battlefields and strengthen its use of emerging tech.

The project has been plagued with criticism from all angles since it was first announced after Oracle, Microsoft and IBM argued the contract should be divided up between several providers in order to increase data security.

Oracle’s Washington office head Ken Glueck added: “We are totally satisfied,” when asked about the termination of the JEDI deal.

Amazon’s cloud service market share was at 40.8 per cent last year, after falling from 51.8 per cent from 2017, meanwhile its rivals Microsoft, Google and Alibaba’s stocks have grown in that period.

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