Amazon has won in its court request to temporarily block a $10bn US defence contract awarded to rival Microsoft, after accusing the Trump administration of having shown “unmistakable bias” in its procurement process.
The ecommerce group had sued the defence department in November, alleging that its division AWS had been denied the cloud computing contract, known as Jedi, because of “escalating and overt pressure” from Donald Trump targeting its chief executive, Jeff Bezos.
Amazon claimed in the lawsuit that the president, who had displayed hostility in the past towards the Bezos-owned newspaper The Washington Post, improperly influenced Pentagon officials. The defence department later awarded the Jedi contract to Microsoft.
A federal judge on Thursday granted Amazon’s request for a preliminary injunction blocking the Department of Defense from proceeding with the contract while the case is litigated. She also ordered the ecommerce company to put up $42m for costs in case it was ultimately determined that the injunction had been wrongfully issued.
In a statement, a spokesman for the department said it was “disappointed” with the ruling and believed “the actions taken in this litigation have unnecessarily delayed implementing DoD’s modernisation strategy and deprived our warfighters of a set of capabilities they urgently need”.
“However, we are confident in our award of the Jedi cloud contract to Microsoft and remain focused on getting this critical capability into the hands of our warfighters as quickly and efficiently as possible,” Lieutenant Colonel Robert Carver said.
The judge’s decision was highly unusual and a major boost to Amazon’s case, said Professor Steven Schooner, from George Washington University’s law department, and an expert in government contract law.
“I don’t think I’m alone in being surprised,” he said, noting that the government did not typically oppose calls for a stay when contract decisions are disputed.
“It’s even more unusual that when the government does object to the stay, the judge would order the injunction,” he added. “By agreeing with Amazon that they’re entitled to the injunction, what the court is signalling is that ultimately it’s more likely than not that [Amazon] will prevail.”
In opposing the injunction, Lieutenant General Bradford Shwedo told the court: “Any further delays negatively impact our national security, both now and in the future. Our adversaries are employing these technologies and our warfighters need this capability now.”
Shares in Amazon edged 0.3 per cent higher, while those in Microsoft moved lower by the same amount, in afternoon trading following the ruling, which was filed under court seal.
“While we are disappointed with the additional delay we believe that we will ultimately be able to move forward with the work to make sure those who serve our country can access the new technology they urgently require,” Microsoft said in a statement.
“We have confidence in the Department of Defense, and we believe the facts will show they ran a detailed, thorough and fair process in determining the needs of the warfighter were best met by Microsoft.”
Amazon is yet to comment on the ruling. On Monday the company filed a motion seeking to depose Mr Trump as part of the appeal, after which Microsoft’s legal team accused Amazon of “making this case all about President Trump”.
Amazon also demanded testimony from defence secretary Mark Esper, and his predecessor, Jim Mattis. The defence department said it was “strongly opposed” to the request.
In a court filing, Microsoft said Amazon had “alleged zero facts plausibly indicating that any DoD official involved in the Jedi procurement, at any level, was actually influenced by the alleged anti-Bezos statements in any way”.
Amazon’s motion attracted support from several organisations who have filed amicus briefs, or statements of opinion, to the court.
“President Trump’s animus and retaliation against Amazon is part of an extensive pattern of conduct in which President Trump has effectively used the levers of government power he oversees to punish his perceived enemies and reward his friends,” read one submission from Protect Democracy, an organisation set up by former government officials in 2017 to oppose Mr Trump’s policies.
Amazon’s cloud computing business through AWS is comfortably the market leader but analysts see the legitimacy gained from being the Pentagon’s cloud provider of choice as a significant driver for growth for Microsoft in 2020 and beyond.
Additional reporting by Katrina Manson in Washington