U.S. court rules in favor of Amazon in CIA contract dispute

Man holds laptop with logo of online retailer Amazon during protest in Berlin demanding implementation of unitary tax to fight tax evasion

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A man holds a laptop with the logo of the online retailer Amazon during a protest by the Attac pressure group outside the Chancellery in Berlin demanding from G20 summit participants the implementation of a unitary tax to fight tax evasion, September 5, 2013. REUTERS/Thomas Peter/Files

REUTERS - A U.S. court ruled in favor of Amazon.com Inc (NSQ:AMZN) in the online retailer's dispute with IBM (NYS:IBM) over a $600 million cloud computing contract awarded by the Central Intelligence Agency, a court notice showed.

Amazon Web Services (AWS), the cloud services unit of Amazon.com, beat IBM to win the CIA contract earlier this year.

IBM protested the award, triggering a report by the U.S. Government Accountability Office (GAO). The GAO recommended in June that the CIA re-do parts of the contract and give IBM another chance to bid.

Amazon then filed a legal complaint against the recommendations.

On Monday, Judge Thomas Wheeler of the U.S. Court of Federal Claims ruled against IBM after hearing oral arguments. A written opinion will follow, according to a court notice.

International Business Machines said it was disappointed with the ruling and planned to appeal the decision.

"This court decision seems especially inappropriate in light of the current times, since IBM's bid was superior in many ways, including being substantially more cost-effective," the company said in an emailed statement.

Amazon was not immediately available for comment.

Public cloud computing, which AWS pioneered in 2006, lets companies rent computing power, storage and other services from data centers shared with other customers. The services typically are cheaper and more flexible for companies than maintaining their own hardware.

The case is in re Amazon Web Services Inc vs United States, Case No. 13-00506, U.S. Court of Federal Claims.

IBM shares were down 1.3 percent at $179.61 in late morning trading on the New York Stock Exchange, while Amazon was down 2.8 percent at $301.51 on the Nasdaq on Tuesday. (Reporting by Sakthi Prasad and Sruthi Ramakrishnan in Bangalore; Editing by Supriya Kurane and Saumyadeb Chakrabarty)

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