The U.S. Department of Defense on Tuesday canceled its litigation-snarled cloud-computing contract known as JEDI. Microsoft (MSFT) won that $10 billion contract in October 2019, but Amazon (AMZN) contested it in court. Microsoft stock dipped on the news while Amazon stock rose.
In a news release, the Pentagon said the Joint Enterprise Defense Infrastructure contract no longer fits its needs “due to evolving requirements, increased cloud conservancy, and industry advances.”
After Microsoft beat out heavily favored Amazon Web Services to win the JEDI contract, Amazon claimed interference from the Trump administration. Amazon cited then-President Donald Trump’s animosity toward the e-commerce giant in a lawsuit over the contract.
The Pentagon plans to open a new contract, the Joint Warfighter Cloud Capability, to competition. The agency says it will solicit bids from both Amazon and Microsoft for the contract, adding that they are the only cloud service providers that can meet its needs. The Department of Defense wants to modernize its information technology infrastructure to take advantage of the internet cloud.
Microsoft Stock Falls On Contract Loss
In afternoon trading on the stock market today, Microsoft stock dipped 0.5%, near 276.15. Amazon stock rose 4.7%, near 3,675.
In a blog post, Microsoft said it supports the Pentagon’s decision to seek a new cloud computing contract.
“The DoD faced a difficult choice: Continue with what could be a yearslong litigation battle or find another path forward,” Toni Townes-Whitley, president of U.S. regulated industries at Microsoft, wrote. “The 20 months since DoD selected Microsoft as its JEDI partner highlights issues that warrant the attention of policymakers: when one company can delay, for years, critical technology upgrades for those who defend our nation, the protest process needs reform.”
Amazon did not immediately respond to a request for comment.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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