Microsoft Is a Finalist in the Race for a $10 Billion Contract

Oracle and IBM dropped

Microsoft (MSFT) has made it to the short list of companies being considered for a lucrative cloud contract from the US Department of Defense. The Pentagon announced in April that Microsoft and Amazon (AMZN) were now the only companies left in the race for the contract to provide it with cloud computing services under its JEDI (Joint Enterprise Defense Infrastructure) project.

Last year, Microsoft, Amazon, Oracle (ORCL), and IBM (IBM) submitted bids for the Pentagon’s JEDI contract. Google (GOOGL), another top cloud computing company, decided not to compete for the JEDI contract, citing ethical issues and other limitations. Microsoft and Amazon being the two final companies in the race for the JEDI contract shows that the bids made by Oracle and IBM were unsuccessful.

Microsoft Is a Finalist in the Race for a $10 Billion Contract

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Citing what they viewed as a conflict of interest, Oracle and IBM protested Amazon’s participation in the bidding for the JEDI contract.

JEDI presents opportunities for both companies

The race for the Pentagon’s JEDI contract now pits the world’s top two cloud vendors against each other. According to Synergy Research estimates, Amazon dominated the global cloud market with a market share of ~35% at the end of 2018, more than double Microsoft’s 15%. IBM and Google were tied in third place with 7.0% market shares each. China’s Alibaba (BABA) exited 2018 with ~5.0% of the global cloud market share.

Microsoft’s winning the Pentagon’s JEDI contract could help it narrow the gap between it and Amazon, whereas a win for Amazon would see the company widen its lead.