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IBM Has Stopped Fighting Amazon's $600 Million Cloud Deal With The CIA

Julie Bort
Virginia Ginni Rometty

Flickr/Fortune Live Media

IBM CEO Ginni Rometty

Earlier this month, Amazon officially won a court battle with IBM over a cloud computing project for the CIA worth up to $600 million.

IBM, which had put in a competitive bid, protested the contract. It said it was going to appeal this court decision, too. But a few days ago, IBM officially gave up the legal fight, reports Federal Computer Week's Frank Konkel.

From court documents we learned that Amazon's bid was a whopping $54 million higher than IBM's, but the CIA said it chose Amazon because it thought its tech was better.

This win for Amazon is a game-changer in the cloud industry. It marks the first time Amazon will build a so-called "private" cloud. That means Amazon's cloud tech will be used only by the CIA and not shared with other companies.

Amazon is the biggest "public" cloud player, where many companies share the same computing equipment. Companies like IBM compete with Amazon by saying that Amazon isn't as reliable or secure. The CIA contract proves that one of the world's most secretive agencies thinks otherwise.

But IBM doesn't have to lick its wounds much. It's still winning a lot of government business including a 10-year deal to build a cloud for U.S. Department of the Interior worth up to $1 billion.  On the other hand, that DOI contract was worth $10 billion, and several of the vendors that won a piece of it use Amazon's cloud. So Amazon will quietly nab some of that cash, too.

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