Amazon.com, Inc. (NASDAQ:AMZN) has filed an appeal in the Federal Court in the US in November 2019 to probe wrongdoings in awarding $10 billion JEDI contract to Microsoft Corporation (NASDAQ:MSFT). The defense department has awarded the contract to Microsoft on October 25, 2019. Ellen Lord, the Under Secretary of Defense (Acquisition and sustainment), said the department will deal with a legal suit filed by Amazon. However, the project will move on as planned.
How Trump interfered with the contract?
Trump has ire against Jeff Bezos, Chief Executive Officer of Amazon. He made it clear in a chat with his supporters during an election campaign trail that trouble would begin for Amazon. According to a report in Vanity Fair in 2018, Trump in the White House is prepared to thwart the advances of Amazon.
Troubles began for Jeff
Jeff owns the Washington Post that publishes facts and wrongdoings of President Trump. It is one of the reasons for Trump to develop an enmity over Jeff and seems interfered in the JEDI contract when everyone believes Amazon is the right candidate to clinch the deal. Amazon has built the largest cloud platform in the world – AWS. It handles sensitive data of millions of people from across the world. Amazon also serves the Central Intelligence Agency. The company felt such deals will help it to win lucrative JEDI contract and makes way to win such contracts in the future too. But, its fortunes are overturned with the JEDI contract awarded to Microsoft in October.
Amazon has generated revenues of $25 billion from AWS so far this year, outnumbering the revenues reported from its retail sales in entire North America. The JEDI contract, which spans over ten years, is meaningful for the company. However, it will not make an important entry in the balance sheet of Amazon.
Wedbush’s analyst, Dan Ives, said the filing of Amazon in federal court may not reverse the decision, and the project would go on smoothly. It makes way for Microsoft to capitalize on the cloud market going forward. Microsoft already commands a 17% share of the cloud space. Amazon is at a loss because spending on the cloud is expected at over $1 Trillion in the next ten years. Therefore, it is a significant defeat for Amazon.
