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Microsoft's Work For Pentagon Suspended As Judge Approves Amazon Appeal

Neer Varshney

A federal judge on Thursday approved Amazon.com Inc.'s (NASDAQ: AMZN) appeal and issued a temporary injunction against Microsoft Corporation's work on a $10 billion Pentagon cloud computing contract, CNBC reported.

What Happened

Amazon had requested the court to halt the Microsoft operations on the Joint Enterprise Defense Infrastructure Cloud, or JEDI, until it gets a ruling on its protest against the award.

Microsoft was awarded the contract in October ahead of the e-commerce giant's cloud subsidiary Amazon Web Services.

Amazon has maintained that it was rejected the contract, despite being the frontrunner, due to personal interference from President Donald Trump, who allegedly asked the military officials to "screw Amazon."

Earlier this week, the e-commerce giant sought to depose President Trump along with other senior military officials.

"President Trump has repeatedly demonstrated his willingness to use his position as President and Commander in Chief to interfere with government functions – including federal procurements – to advance his personal agenda," an AWS spokesperson said in a statement to media at the time.

"The question is whether the president of the United States should be allowed to use the budget of the D.O.D. to pursue his own personal and political ends."

What's Next

Both Microsoft and Pentagon officials maintained that the contract was awarded fairly and that the ruling will cause an unnecessary delay in modernizing the military equipment.

"We are disappointed in today's ruling and believe the actions taken in this litigation have unnecessarily delayed implementing DoD's modernization strategy and deprived our warfighters of a set of capabilities they urgently need," Pentagon spokesperson Robert Carver said in a statement to CNBC.

Microsoft spokesperson Frank Shaw told CNBC that while this may delay their work on the contract but the company has "confidence" in the process through which the Defense Department selected them for the contract.

Price Action

Microsoft's shares closed 0.54% lower at $183.71 on Thursday and traded mostly unchanged in the after-hours session.

Amazon's shares closed 0.47% lower at $2,149.87 and were also mostly unchanged in the after-hours.

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