Tech Giants Split $9 Billion Pentagon Cloud Contract

The Pentagon has awarded a high-profile cloud-computing contract worth up to $9 billion U.S. to technology giants Amazon (AMZN), Google (GOOGL), Microsoft (MSFT) and Oracle (ORCL).

The four companies will split the contract responsibilities and financial payments, according to a statement from the U.S. Defense Department.

The contract is for work developing the U.S. military’s Joint Warfighting Cloud Capability (JWCC).

Originally, the Pentagon had awarded the contract to Microsoft back in 2019. However, a legal battle ensued as Amazon, the top player in the cloud infrastructure market, challenged the Pentagon’s decision. Oracle also challenged the Pentagon’s decision in court.

Last year (2021), the Pentagon changed course, asking for bids from Amazon, Google, Microsoft, and Oracle to address its cloud computing needs.

The new contract award is a potential bonanza for the tech companies involved, particularly Oracle, which is a burgeoning player in the cloud computing space.

Oracle generated $900 million U.S. in cloud infrastructure revenue in the quarter that ended August 31 this year, a small fraction of the $20.5 billion U.S. total for Amazon Web Services (AWS) in the same time period, according to industry data.

Technology stocks are down across the board this year, with the tech-laden Nasdaq index having decreased 31% year-to-date and firmly in a bear market.