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A newspaper, a military contract, a tech giant and a president

Sarah Putt, Contributor. 20 February 2020, 3:12 pm

When Amazon founder and CEO Jeff Bezos bought the Washington Post in 2013, he can't have foreseen that would it one day result in a battle with a US President. But that's how it's shaping up.

A quick recap: Microsoft and Amazon bid for a massive US defence contract known as JEDI (it stands for Joint Enterprise Defense Infrastructure - but you gotta think that someone at the Pentagon loves Star Wars). It is a $10 billion cloud computing contract, and one analyst has suggested it could reap the successful bidder as much as $40 billion over several years. Microsoft was awarded the contract, but Amazon challenged the decision, and this month a federal judge ordered work to stop on the contract. 

This quote from the New York Times outlines Amazon's challenge: "Amazon protested and said the process had been unfair. The internet giant claimed that President Trump had interfered in the bidding for the contract because of his feud with Jeff Bezos, Amazon's chief executive and owner of The Washington Post. The Post has aggressively covered the Trump administration, and the president has referred to the newspaper as the "Amazon Washington Post" and accused it of spreading "fake news.""

Obviously Microsoft, the company awarded the contract, has a different view, so feel free to read more about the case here.

US tech journalist Kara Swisher, whose column is a must read (on everything tech-related, not just this story), is calling it an "epic battle between Bezos and Trump". She notes that Trump often conflates the ownership of Washington Post, with the ownership of Amazon. He wouldn't be the first one. When Bezos bought the publication, it appeared some at the Washington Post itself were a little concerned it might be used to support the tech giant's lobbying efforts.

I remember talking about the deal on Radio NZ's Nine to Noon show at the time and being careful to note that it was a personal purchase, not an Amazon purchase. I found my notes from that session, and it's interesting that I felt the need to explain that Bezos could afford to spend US$250m on a newspaper because Amazon is a tech giant (I don't think I would now). Here is my description of the business seven years ago:

It's not only the world's largest online retailer, it's a major supplier of cloud computing services, offering data storage at a very low-cost rate to businesses. [It] provides back office support to retailers giving them access to millions of customers, petabytes of server space and state of the art warehouse facilities. Unlike Apple, it doesn't have vast cash reserves and even made a small loss last year of $39m. But the market backs Amazon - after it survived the DotCom bust of the early 2000s - and it has a stock market value of $137bn, and Bezos' personal fortune is estimated at $25bn.

That was in 2013. According to Bloomberg in January, Bezos' fortune is estimated at around $126.5 billion, after Amazon's stock surged to $2100.

Fair to say that in one year, or five years, Trump will be gone from the White House, but Bezos will still be standing. Also, this is not just an American story because Amazon, like all the tech giants, is dominant globally. The results of this stoush could potentially make all of us more than spectators.

 


Comments

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David Lane 28 February 2020, 12:53 pm

Of course, it's idiotic for the US to make itself dependent on either corporation's services. Perhaps NZ's gov't will show it's sharper than the US administration by doing things like ditching MSFT, Apple, Amazon, Google, and Facebook services in favour of services either provided in-house, or onshore in NZ, by NZ companies.


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