The Next Move in Amazon-IBM Tussle Over CIA Cloud Contract

by Christopher Freeburn | July 25, 2013 10:04 am

pretty clouds 630 300x200 The Next Move in Amazon IBM Tussle Over CIA Cloud Contract[1]Amazon (AMZN[2]) is asking a federal court to allow it to pursue a service agreement with a leading U.S. intelligence agency[3].

Earlier this year, Amazon signed a contract to provide cloud services to the Central Intelligence Agency (CIA). The four-year deal, worth about $600 million rankled computer services giant IBM (IBM[4]), which filed a formal protest, the Wall Street Journal noted.

Responding to IBM’s complaint, the Government Accountability Office (GAO) issued a recommendation that the CIA renegotiate the deal. Amazon says that its agreement with the CIA was the best deal for the spy agency, which has until early next month to indicate if it will accept the GAO’s guidance.

Amazon Web Services, its cloud computing division, generates annual revenue of $2 billion today, but is expected to eventually dwarf the company’s retail business.

The company is looking for a response from the court by late September. Reports of the deal between the CIA and the Internet retail powerhouse[5] first surfaced in March.

Shares of Amazon fell slightly in Thursday morning trading, while IBM edged higher.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2012/08/pretty-clouds-630.jpg
  2. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  3. service agreement with a leading U.S. intelligence agency: http://online.wsj.com/article/SB10001424127887323610704578626333614900390.html
  4. IBM: http://studio-5.financialcontent.com/investplace/quote?Symbol=IBM
  5. the deal between the CIA and the Internet retail powerhouse: http://investorplace.com/2013/03/amazon-scores-600m-cloud-deal-with-cia/

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