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Pentagon Cancels $10 Billion JEDI Cloud-Computing Contract

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The decision also comes days after Andy Jassy, the former head of Amazon’s cloud business, took over as chief executive from Amazon’s founder, Jeff Bezos. The appointment of Mr. Jassy accentuated the importance of cloud computing to big tech companies, which have built giant data centers all over the world to accommodate new business and government customers.

The 10-year JEDI contract was awarded to Microsoft in 2019 after a fight among Amazon and other tech giants for the deal to modernize the military’s cloud-computing systems. Much of the military operates on outdated computer systems, and the Defense Department has spent billions of dollars trying to modernize those systems while protecting classified material.

Although some companies, including the business software company Oracle, lobbied for the Pentagon break the contract into pieces and award them to multiple suppliers, the Defense Department pressed forward with its plan to use a single cloud provider, believing that would be the most seamless and secure approach.

Because of the size and security requirements of the JEDI contract, Amazon was widely considered the front-runner. When the award fell to Microsoft, Amazon sued to block the contract, arguing that Microsoft did not have the technical capabilities to fulfill the military’s needs and that the process had been biased against Amazon because of Mr. Trump’s repeated criticisms of Mr. Bezos, who also owns The Washington Post.

“For Microsoft, this went from a lottery deal to a court nightmare,” said Daniel Ives, the managing director of equity research at Wedbush Securities. Microsoft said that Amazon’s claims of bias lacked evidence and that it was prepared to provide the necessary technology to the military, while the Defense Department said Mr. Trump had not played a role in the decision.

The Washington Post aggressively covered the Trump administration, and Mr. Trump often referred to the newspaper as the “Amazon Washington Post” and accused it of spreading “fake news.” He also said companies besides Amazon should be considered for the JEDI contract, and Amazon argued he had used “improper pressure” to sway the Pentagon as it selected a technology vendor.

In April, a federal court said it could not dismiss the possibility the Mr. Trump had meddled in the process. The court’s ruling set the stage for the Pentagon, which had argued that the extensive delays surrounding the contract caused national security concerns, to walk away from the contract.

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