President Donald Trump welcomes James Mattis as they pose for a photo before their meeting at Trump International Golf Club, in Bedminster Township, New Jersey.
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An upcoming book on James Mattis’ tenure as secretary of Defense claims President Donald Trump told Mattis to “screw Amazon” out of a $10 billion cloud contract for the Pentagon.
The Joint Enterprise Defense Infrastructure, or JEDI, contract was awarded to Microsoft late Friday evening, sending shares of Microsoft stock up more than 3%.
Early in the process market leader Amazon was seen as the favorite, then President Trump said in July that he was looking into the contract after companies protested the bidding process.
In the summer of 2018, President Trump called Mattis and directed him to “screw Amazon” out of a chance to bid on the JEDI contract, according to the forthcoming book “Holding The Line: Inside Trump’s Pentagon with Secretary Mattis.” The account was written by Guy Snodgrass, who served as a speechwriter for Mattis.
“Relaying the story to us during Small Group, Mattis said, ‘We’re not going to do that. This will be done by the book, both legally and ethically,'” Snodgrass writes. CNBC has reviewed the relevant passages of the book.
The Department of Defense and the White House could not be immediately reached for comment. Neither Amazon nor Microsoft were immediately available for comment on the president’s alleged order.
The contract is capped at $10 billion over the next ten years. If it ends up being worth that much, it would likely be a bigger deal to Microsoft than it would have been to Amazon. Microsoft does not disclose Azure revenue in dollar figures but it’s widely believed to have a smaller share of the market than Amazon, which received $9 billion in revenue from AWS in the third quarter.
“We’re surprised about this conclusion,” an AWS spokesperson told CNBC in an email on Friday, after the contract was awarded to Microsoft. “AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion. We remain deeply committed to continuing to innovate for the new digital battlefield where security, efficiency, resiliency, and scalability of resources can be the difference between success and failure.”
Wedbush analyst Dan Ives called the deal a “game changer” for Microsoft, writing in a note to clients that the deal “will have a ripple effect for the company’s cloud business for years to come.” He also said that he expects Amazon to challenge the outcome in court, but for Microsoft to prevail.
Amazon CEO Jeff Bezos has been a constant source of frustration for the president. Bezos owns The Washington Post, which Trump regularly criticizes for its coverage of his administration. Trump also has gone after Amazon repeatedly on other fronts, such as claiming it does not pay its fair share of taxes and rips off the U.S. Post Office.
— CNBC’s Kate Fazzini and Jordan Novet contributed to this report.