Amazon Sues Pentagon for Awarding Cloud Deal to Microsoft

Amazon AMZN reportedly filed a lawsuit protesting the U.S. Defense Department’s decision to award its Joint Enterprise Defense Infrastructure (JEDI) cloud contract to Microsoft MSFT.

Per a Bloomberg report, Amazon had been planning to protest against the loss of the JEDI cloud contract as it believes the evaluation process was deficient and needs close assessement. Since the complaint contains sensitive information, in-depth details regarding the same have been kept under wraps.

Valued at nearly $10 billion, the JEDI cloud contract sparked competition between Amazon and Microsoft. Other contenders were IBM and Oracle ORCL.

According to a report by TheStreet, Amazon leads the cloud computing market with a business share of nearly 33%, while Microsoft has about 16% share.

Markedly, the cloud computing arena has been quite a revenue-churning platform for Amazon. The JEDI contract is expected to have provided a boost to its cloud computing arm — Amazon Web Services (AWS).

AWS: A Key Catalyst for Amazon

AWS has been gaining momentum owing to an expanding customer base and strategic partnerships. Notably, AWS has continued to remain a strong margin generating division for Amazon.

Recently, the company extended its ties with Salesforce.com CRM, the leading provider of on-demand customer relationship management software. The deal, which is focused on customer service centers, is Amazon’s latest gambit to increase market share in the lucrative cloud computing business.

Moreover, Amazon has made AWS IQ generally available, which is aiding easy connectivity with AWS-Certified experts and seamless interaction with project-oriented customers. Further, AWS made Amazon Quantum Ledger Database available to general customers, aiding storage of structured and unstructured data.

Amazon’s continued efforts toward strengthening services offerings is a major growth driver. Moreover, its expanding services portfolio will steadily aid the company in winning clientele, helping Amazon to maintain its dominant position in the cloud market.

In third-quarter 2019, AWS’ market share was around 40%, per a report from Synergy Research Group. Although cloud service providers like Azure, Google Cloud and Alibaba Cloud witnessed expansion in their market share in the same quarter, AWS continues to lead the race.

Zacks Rank

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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