business news in context, analysis with attitude

Content Guy’s Note: Stories in this section are, in my estimation, important and relevant to business. However, they are relegated to this slot because some MNB readers have made clear that they prefer a politics-free MNB; I can't do that because sometimes the news calls out for coverage and commentary, but at least I can make it easy for folks to skip it if they so desire.

• The US Department of Defense last week awarded a $10 billion technology contract for the Joint Enterprise Defense Infrastructure, known as JEDI, to Microsoft, spurning Amazon, which generally has been seen as the leader in this technology and had been thought to be the leading candidate to get the 10-year contract.

The New York Times reports that "the contract has an outsize importance because it is central to the Pentagon’s efforts to modernize its technology. Much of the military operates on 1980s and 1990s computer systems, and the Defense Department has spent billions of dollars trying to make them talk to one another.

"The decision was a surprise because Amazon had been considered the front-runner, in part because it had built cloud services for the Central Intelligence Agency. But that was before Mr. Trump became publicly hostile to Mr. Bezos, who also owns The Washington Post. The president often refers to the newspaper as the 'Amazon Washington Post' and has accused it of spreading 'fake news.'

"In public, Mr. Trump said there were other 'great companies' that should have a chance at the contract. But a speechwriter for former Defense Secretary Jim Mattis says in a book scheduled for publication next week that Mr. Trump had wanted to foil Amazon and give the contract to another company … The award to Microsoft is likely to fuel suspicions that Mr. Trump may have weighed in privately as well as publicly against Amazon. Experts on federal contracting said it would be highly improper for a president to intervene in the awarding of a contract."

The contract award is said to boost Microsoft's efforts to compete with Amazon in the cloud computing segment, where Amazon has an approximate 45 percent market share, compared with Microsoft's 25 percent. And, it "is also a hit to the reputation of Amazon, which decided last year to open a large outpost in Northern Virginia that will eventually employ at least 25,000 people."
KC's View:
The story also makes the point that the political angles in the contract decisions will at the very least will give Amazon grounds to protest the decision. And Amazon certainly can afford the legal fees…