Pentagon Cloud Computing Deal Could Give Amazon Monopoly


Good news for employees is not necessarily good news for everyone else. For example, consider the announcement that will now pay at least $15 per hour. That may be great for current employees, but it’s bad for any smaller companies that hope to compete with Amazon on price.

Amazon has a history of cutting prices to dominate a developing space, then using its massive market power to block others from even entering. That’s why it opposed internet sales taxes for years, as it grew. Now that it’s large enough, it collects sales tax revenue in almost every state. Today, Amazon understands that internet sales taxes can help prevent competitors from being able to challenge it.

The same thing could happen in another emerging area, cloud computing.

Amazon already dominates this field. Forbes finds that “80 per cent of enterprises are both running apps on or experimenting with Amazon Web Services (AWS) as their preferred cloud platform.” Amazon wants to maintain that dominance and may have found a way to have the federal government help it do so.

The Pentagon is considering handing AWS a 10-year deal to handle all of the military’s information. That means everything from mundane health plan data to classified weapon system details.

Pentagon Goes Cloud

The biggest problem is the plan itself. The Pentagon wants to use a single cloud provider, and that simply makes no sense. In the real world, more than half of all companies are using more than one cloud provider (often, admittedly, one of them is AWS), and that percentage is only expected to climb. That’s generating competition and driving down prices in cloud computing.

The Pentagon deal could freeze that. If AWS gets the entire contract, it would effectively lock out competitors and could dominate the government cloud space for years. That’s the company’s goal, of course. The Wall Street Journal reports that Amazon now has more than 100 lobbyists, and it spends some $13 million each year lobbying. That investment can buy it a lot of access. Amazon aims to use that access to keep others from challenging it.

Amazon Gets Pushback

Luckily, lawmakers aren’t in Amazon’s pocket. Yet. They’re taking action to push back.

In the Fiscal Year 2019 military spending bill, they included some very direct language. Congress wants the military to develop a “strategy to sustain competition and innovation throughout the period of performance of each contract, including defining opportunities for multiple cloud service providers and the insertion of new technologies.”

That makes sense. As in the private sector, competition in the government arena among several cloud providers can provide better service at a better price. When the Pentagon give lawmakers what they want, it’ll be giving them a plan to use several cloud providers to handle its data.

Competition can also accomplish another goal Congress is insisting on. Lawmakers also want “an assessment of potential threats and security vulnerabilities of the proposed cloud computing strategy, and plans to mitigate such risks.”

Competition = Security

Well, the competition itself can help guarantee security. When a company is competing against only itself, it can become complacent. Having several competing cloud providers would force each to continuously update its security measures and protect our nation’s vital military data.

It’s important to create this race toward better security. After all, Amazon’s most important new product, the Echo speaker, is vulnerable to hackers. If its AWS cloud is just as vulnerable, our military members could be at risk. Multiple cloud providers would help mitigate that risk.

When the military announced it wanted to give a single cloud provider a long-term deal, experts knew what was going on. “Everybody immediately knew that it was for Amazon,” one rival bidder told Vanity Fair. And indeed, the terms of the initial deal were carefully crafted to exclude anyone except AWS.

That’s not fair, and it’s not healthy for the country in general. There’s still time to divide up the contract and improve the Pentagon’s cloud. Lawmakers are smart to have asked. Now the military must deliver a better plan.

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