There has been an ongoing legal battle between Amazon and IBM over a $600 million government contract to build out a private cloud infrastructure for the CIA. On October 30th, IBM effectively gave up this legal fight by withdrawing its complaint from court. Some industry experts call this defeat of IBM the signal of a new age of tech that is being introduced into the US government. For many years, the US government only dealt with a select group of IT companies. The government would routinely give out contracts to tech titans such as HP, Dell, SAP and Oracle. While Amazon may be considered a tech giant by some, it is important to note that Amazon’s cloud technology is rather new and Amazon is known for e-commerce, not cloud computing.
Industry experts suggest that all of this could change soon. Since Amazon has won the legal battle to provide a secretive $600M cloud infrastructure for the CIA, expect a public cloud to be offered to consumers as well. Amazon currently operates Amazon Web Services which is a cloud based hosting solution for large websites. The success of Amazon Web Services has certainly helped Amazon secure these types of government IT contracts.
Amazon has released no formal statement on this matter. IBM has said very little about this case in official statements. IBM did tell a government technology trade magazine that “In light of the government’s recent submissions emphasizing its need to move forward on the contract, IBM has withdrawn its motion.” Analysts are anxious to see if the US government will begin branching out and using more vendors like Amazon on government projects. The same analysts are curious to see if the US government will be less apprehensive about using start- ups to complete IT projects in the future.