Microsoft Joins With Rivals To Try And Unseat Amazon’s Dominance In Government Cloud Computing Contracts

As the old saying goes: “The enemy of my enemy is my friend.”

Putting this into action, Microsoft has been making nice with its competitors like Google and Oracle in order to try and get the U.S. government to stop exclusively using Amazon for many of its cloud computing contracts.

Microsoft “has issued talking points to other cloud companies aimed at jointly lobbying Washington to require major government projects to use more than one cloud service”, the Wall Street Journal reported this week. 

It has also sought help from names like VMWare, Dell and HP, so far not asking Amazon to join the group. As of now, Amazon has about 39% of the global cloud market, the report notes. Microsoft comes in at 21%. 

But when it comes to government work, Amazon truly dominates, with a 47% share of the 2021 U.S. and Canada public-sector market order, the report says. For example, the NSA selected Amazon last year for a contract worth as much as $10 billion, the report says. 

Unsurprisingly, Amazon has taken aim at Microsoft’s efforts to unseat it, stating through a spokesman: “Public-sector customers should have the freedom and flexibility to determine how to obtain secure, reliable and cost-effective cloud services and software—from the vendor or vendors of their choice—without mandates or unfair software licensing restrictions.”

Microsoft has been urging “multicloud” from the government, or the use of more than one company’s infrastructure. 

Cloud now accounts for almost half of Microsoft’s total sales, making it a key focus point anytime the company reports earnings. This week, Microsoft missed expectations for growth in its cloud services business and the company has reportedly “grown frustrated” with lack of progress being able to sell to the government. 

Microsoft said it “has consistently advocated a multicloud approach as a commercial best practice, and almost all companies have adopted this.” A spokesman said the company works “with other companies and trade associations to encourage the federal government to adopt the same strategy.”