The Pentagon awarded a $10 billion cloud-computing contract to Microsoft, following a heavily scrutinised bidding process in which Amazon had been seen as the favourite.
The 10-year contract for the Joint Enterprise Defence Infrastructure, or Jedi, is aimed at making the US defence department more technologically agile.
Amazon had been considered the front-runner – until President Trump began questioning whether the process was fair. In July Trump told reporters that he was getting “tremendous complaints about the contract with the Pentagon and Amazon”.
Trump has repeatedly criticised Amazon and its founder Jeff Bezos who also owns the Washington Post newspaper.
Amazon said it was “surprised” by the decision.
A “detailed assessment purely on the comparative offerings” would “clearly lead to a different conclusion” a statement from the Pentagon read.
Under the contract, Microsoft will provide artificial intelligence-based analysis and host classified military secrets among other services.
This is being done to replace its ageing computer networks with a single cloud system. It is expected that Jedi will provide the U.S. military better access to data and the cloud from battlefields.
For Microsoft the move will boost its share price and bring “significant positive financial implications” for the company in the coming years.