If Trump wants to take a shot at Amazon, there's a potential billion-dollar deal staring him right in the face
- President Donald Trump wants to take on Amazon.
- Amazon appears to be the frontrunner for a lucrative contract with the Pentagon to provide its cloud services.
- It could be his first opportunity to take a shot at the retail giant.
President Donald Trump appears to be gunning for a fight with Amazon - and he may have the chance to strike a serious blow in the very near future.
Within the next few weeks, the Defense Department will submit to Congress its request for proposals on what could be a $10 billion, 10-year contract to provide the military with cloud services. The Pentagon is moving to migrate its data onto a cloud.
Pentagon spokeswoman Heather Babb told Business Insider that the competition will be "full and open" to land the high-profile and well-compensated government contract. Many insiders believe Amazon, through its Amazon Web Services platform, has the inside track at winning the bid.
Amazon did not respond to a request from Business Insider asking if it planned to pursue the contract. But the company's status as the perceived frontrunner has drawn some backlash from competitors and lawmakers, who either think Amazon has an unfair advantage or that it is unwise for the Pentagon to select just one vendor.
The internet giant holds the largest cloud infrastructure market share, Bloomberg reported. Its status as the perceived frontrunner has been largely cemented by its $600 million deal with the CIA in 2013. That showed it has the capability to manage and secure sensitive information, and it provides the company with a leg up on obtaining top-level security credentials.
A controversial deal worth billions
In draft requirements released by the Pentagon for the project - which is called the Joint Enterprise Defense Infrastructure Cloud initiative, or JEDI - bidders must be be able to obtain those security credentials within nine months of winning the contract. As of now, Amazon Web Services is the only vendor potential vendor that meets that requirement.
That deal was originally supposed to be worth up to $1 billion in value, but the Pentagon slashed the total after being faced with criticism over how it awarded the contract, The Washington Post reported. The criticism focused on how the Pentagon showed "favoritism" toward the Amazon Web Services partner, according to The Post, which is owned by Amazon CEO Jeff Bezos.
JEDI came in the crosshairs of lawmakers in this month's omnibus spending bill. Lawmakers on the House Appropriations Committee, which wrote the bill, expressed concern about having the contract go to a single company, which is what the Pentagon favors.
The committee requested a report to both the House and Senate Armed Services committees within 60 days of the spending bill's passage to explain why a single-award strategy was best. Lawmakers wanted to know what exit strategy the Pentagon has as well, in case the arrangement backfired.
The Pentagon had 45 days from the spending bill's passage to provide the committees with their request for proposals for the JEDI program, along with spending requests for 2018 and 2019.
House Appropriations Committee spokeswoman Jennifer Hing said "the Committee has concerns about any contract that limits commercial competition by locking the department into 10-year contracts with no exit strategy."
Will Trump jump in?
This is where Trump comes in.
The president has waged war against the internet giant for more than a year. On Wednesday, Axios reported that Trump is "obsessed" with Amazon and eyeing legal means to target it, perhaps through a change in Amazon's tax status or utilizing antitrust legislation against the company. On Thursday, his reelection campaign manager hinted at potential escalation.
Some opponents of the potential military agreement are clearly trying to plant a thought in the president's mind.
The group Less Government earlier this week placed an ad in the New York Post, known to be one of Trump's favorite publications, highlighting the possible deal. Addressed directly to Trump, the ad warns "Your Defense Department is set to award a no-bid, ten-year contract for all its IT infrastructure to Administration-enemy Jeff Bezos' Amazon."
Trump also has something of a history of trying to influence his administration to move against a business entity he does not like.
The Department of Justice launched an antitrust lawsuit against AT&T in its merger with Time Warner, with The New York Times reporting that DOJ told the companies to sell off CNN as a precondition of the merger. Trump had spoken out against the merger extensively, targeting CNN as part of it. The Justice Department said Trump played no role in its decision.
"The issue to watch with Amazon in the short run is a movement against the company receiving the sole award for cloud computing contracts for the Department of Defense," said Dan Clifton, an analyst at Strategas.
The person pointed to legislation proposed by Republican and Democratic senators called the Marketplace Fairness Act, which would allow for sales tax to be collected from online retailers, though senators in states that currently have no sales tax have expressed opposition to the legislation.
The White House did not respond to a request for comment on whether Trump would try to persuade the Pentagon against selecting Amazon for the contract.
"I have stated my concerns with Amazon long before the Election," Trump tweeted Thursday. "Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!"
Regardless of whether Trump decides to go down this path to take a swing at Amazon, or focuses in on antitrust enforcement or new legislation regarding sales tax collection, observers are expecting a fight.
"If reincarnation exists, then Teddy Roosevelt has returned as Donald Trump and John Rockefeller as Jeff Bezos," one Republican strategist told Business Insider, referencing the former president's trust-busting crusade at the beginning of the 20th Century. "And their next fight is going to be lit."