Put down your lightsabers... The JEDI war is over. In 2019, Microsoft scored a huge win by snagging the Pentagon's $10B cloud-computing contract (aka: "JEDI"). Over 10 years, Microsoft would modernize the Department of Defense's IT systems, storing and crunching government data in its cloud. After losing the bid, cloud competitor Amazon appealed the decision. In response to the 'Zon's lawsuit, a federal judge temporarily blocked the deal earlier this year.
- The tea: Amazon claimed that then-President Donald Trump sabotaged its JEDI bid because of beef with The Washington Post, which Jeff Bezos owns.
- Now, JEDI is canceled. The Biden admin scrapped the contract, in favor of a new contract that will be awarded to multiple cloud companies.
Cloud moves fast... Two years after outlining its cloud-computing needs, the DoD wants to reassess its options. Now, Amazon and Microsoft will both be solicited for proposals for the new contract, called "Joint Warfighter Cloud Capability" (less catchy). Other qualified bidders could include Google, Oracle, and IBM. The DoD is America's largest employer, which means big cloud cash.
- In context: Companies and governments are moving in droves from on-premise data storage (think: OG Word doc on your PC) to cloud storage (think: Google Doc in the cloud).
- The cloud-computing market is worth $214B, and the competition for market share is intense. Amazon's AWS is the leader, while Microsoft's Azure is #2.
The Cloud Wars are far from fluffy... They're brutal for a reason. Cloud is the oil of the modern economy, powering everything from Netflix to your credit card payments. Cloud infrastructure service revenue was $39B in the first quarter, up 37% from last year. Once a company transitions to a cloud service, it's hard to move off because of high switching costs. High-profile contracts like this Pentagon deal are crucial to gaining market share in a cloud-eat-cloud world.