Microsoft Corp., whose Azure cloud technology competes with industry leader Amazon Web Services to provide companies with internet infrastructure for growing ecommerce and other operations, gained a surprising lift in the cloud business last week when the Pentagon awarded it a $10 billion cloud-computing services contract that had been expected to go to Amazon.com Inc.
But the contract—unthinkable for Microsoft even a year ago—will likely come at a cost, legal and internal.
Amazon—which increased its lobbying efforts in Washington this year as the Pentagon neared its contract decision—is considering a challenge to the award of the contract to Microsoft’s much smaller Azure business, citing President Donald Trump’s interference in the bidding process, according to a person familiar with the matter. Amazon had been widely considered the front-runner because of its superior size and previous cloud contract with the Central Intelligence Agency.
Amazon, Microsoft, Google, Oracle Corp. and other providers of cloud-computing and data-storage services are competing to meet increasing demand for cloud technology, which can play a crucial role in business-to-business and retail ecommerce companies’ plans to build out the internet technology infrastructure they need to operate ecommerce technology ecosystems that help them better interact with customers and trading partners. (Microsoft launched Azure in 2010 as Windows Azure, rebranding it in 2014 to Microsoft Azure.)
The Pentagon contract award came shortly after Microsoft reported that its commercial cloud technology business-led revenue growth year over year for the first fiscal quarter ended Sept. 30; commercial cloud revenue increased by 36% to $11.6 billion as total revenue increased by 14% to $33.1 billion.