The U.S. Department of Defense (DoD) released a proposal for a $10 billion winner-take-all cloud acquisition contract called Joint Enterprise Defense Infrastructure (JEDI) in an attempt to build the U.S. government’s cloud infrastructure. The project is to update the Pentagon's data infrastructure for the 21st century by building a large-scale and secure cloud infrastructure. It lasts 10 years, though it can be discontinued or extended, and will be given to one vendor. The nature of the contract has caused much controversy in the tech industry, as one single cloud service provider could make the competition obsolete. Victory in this contract may lead to victory in future contracts as the DoD looks to rapidly expand its artificial intelligence capabilities.
On September 13 2017, Deputy Secretary of Defense Patrick Shanahan established a new initiative to accelerate the DoD’s adoption of cloud services. Shanahan mentioned that the government should modernize its IT infrastructure, in order to provide the military with access to the best available technology. This initiative was finalized by 2018, and the Pentagon kick started the bidding process in March. Several major competitors in the Cloud services industry including Amazon, Google, and Microsoft entered the bidding. Over the period of the next couple of months, several other tech companies entered the bidding process and Google left it. During the Summer of that year, companies such as IBM and Oracle lodged complaints about the bidding process. The contract was left relatively unchanged throughout the bidding process and bidding was closed in October of 2018. Currently, there has been no announcement about who has won the contract.
Current Marketplace of Cloud Services
In 2006, Amazon opened up their cloud infrastructure, through Amazon Web Services, for other businesses to make use of. Their service gave users an innovative, low-cost, reliable, and adaptable way of storing data, managing internet traffic to their website, and provisioning hundreds of computers to satisfy their technological needs in a matter of minutes.
Their early start in the market has lead to their long reign as the number one cloud service in terms of market share. While competitors in the cloud space are slowly catching up with Amazon, they are still far off. By the end of 2017, Amazon held close to 35% of the world’s cloud infrastructure, beating out many tech giants, including Microsoft, Google, IBM, and Alibaba. Microsoft is the closest company to Amazon, market share-wise, owning 13% of the market and possessing the fastest current growth at 3% gain in market share in 2017 compared to Amazon’s 0.5% increase and Google 1% increase within the same period. IBM, Google, and Alibaba follow immediately behind Microsoft at about 5-8 percent each.
Amazon has also made a name for itself in the government sector through their cloud products, having earned a $600 million contract to build out the CIA’s private cloud in 2013. They also provide the government with GovCloud, a cloud service designed to host sensitive data.
Controversy over Terms of Contract
Even though the JEDI Cloud contest is meant to be an open competition to all participants, many companies do not believe that is true. As mentioned above, Amazon’s accolades puts them at a level that’s hard for many competitors to surmount, especially companies that came late to the cloud race. The largest source of controversy is about the commitment to one vendor. Many companies have voiced complaint that it is unwise for the government to commit to one vendor for such an extended amount of time, especially with how quickly the technology evolves.
Official Complaints by Industry
In April of 2018, Microsoft, IBM, Dell, Hewlett Packard Enterprise and Oracle came together to get the government to change the winner-take-all approach of the contract. Oracle has filed a complaint to the U.S. Court of Federal Claims against the DOD relating the contract, arguing that the JEDI bidding process favors a single vendor, Amazon. IBM has also filed a complaint with the federal government. Sam Gordy, at IBM, argued that "America’s warfighters access...the best technology available across multiple vendors" and that the "single-cloud approach also would give bad actors just one target to focus on should they want to undermine the military’s IT backbone."
Response from Department of Defense
The Pentagon has responded to these worries. The Department of Defense’s Chief Information Officer, Dana Deasy, clarified the reason the government is only looking for one vendor current. He states, “We’ve never built an enterprise cloud. So starting with a number of firms while at the same time trying to build out an enterprise capability just simply did not make sense.” Having additional companies involved would “just double or triple your complexity,” he said. In addition, the contract has options at various points in the 10 year period where the government can choose to continue with the vendor or terminate the contract.
Controversy within Google
Google pulls out of Contract
On October 8th, Google announced that they “are not bidding on the JEDI contract because first, we couldn’t be assured that it would align with our AI Principles." Importantly, they also cited that “there were portions of the contract that were out of scope with our current government certifications.” Both of these reasons can be traced back to the MAVEN contract earlier that year.
In April 2017, the defense department launched the MAVEN project with Google.  The objective of the project was, in Pentagon’s statement, to develop “computer-vision algorithms...of full-motion video data that DoD collects.” Simply, it was to use new advances in machine learning on drone strike images to develop a list of targets to strike given a new image. Google claimed this project was worth $9 million dollars, but internal documents showed initial estimates at $15 million with hopes of the budget increasing to more than $250 million over the next couple of years. Aileen Banks, the executive director of Google’s business with the government, also hoped to use the deal to increase Google’s security clearance. “They are really fast tracking our SRG4 ATO (security cert),” she wrote. “This is priceless."
Over the first 3 months after announcing the contract publicly, Google faced protests within and outside the company. A petition by 4000 google employees called on the company to cancel the contract and declared that they “believe that Google should not be in the business of war." Several dozen employees also resigned in protest, citing various ethical reasons about the use of AI in conflict. By June of that year, Google bent to pressure within and outside the company. The declared their intention “not to renew” the contract with the Pentagon after it expires in 2019. Google’s experience here likely influenced their decision-making when it came to the JEDI contract.
Response from Industry to Google
Management at several major Tech companies responded to Google pulling out. Jeff Bezos, at Amazon, struck a patriotic tone declaring “If big tech companies are going to turn their back on the Department of Defense, this country is going to be in trouble.” Brad Smith at Microsoft declared his intent to continue pursuing the contract with “we want the people who defend USA to have access to the nation’s best technology, including from Microsoft.” Meanwhile, an anonymous group of Microsoft employees produced their own open letter calling on the company not to bid on JEDI. As of right now, Microsoft has not bent to pressure.
The Threat of Unionization
The largest risk of tension between workers and management is unionization. One of the foundations of Silicon Valley is hostility to unions. The high pay and benefits many of the tech workers hold keeps them from having a material interest in organizing. But, controversial decision making by management has increasingly radicalized workers. The decision to take contracts with authoritarian regimes and military organizations conflicts with the values the companies promote to their workers. The result of this conflict of material interest and values has led to worker action, potentially towards unionization.
Action by Google Employees
Google workers have led the way on this. On November 28th, 2018, google workers followed up their victory against the MAVEN project with a signed open letter/petition against the DRAGONFLY project. This project, which is to build a censorship system for google processes in China offended the values many employees held on tech increasing transparency. Frustration with management on gender issues is also causing worker action against Google.
During the month of October, a member of Google’s management was given a $90 million dollar severance package after credible reports came out that he had engaged in sexual harassment. Google workers responded by arranging a hastily organized walkout, with demands including placing labor representation on the corporate board and enforcing class lawsuits against management on sexual harassment.
Action by Microsoft Employees
Microsoft workers have also started to take increasing action. So far, this action has taken the form of open letters and petitions. In July of 2018, 100 microsoft employees wrote an open letter calling on the organization to drop its contracts with the U.S. Immigration and Customs Enforcement agency(ICE). This led to the organization releasing a memo declaring ICE "cruel and abusive" and that the organization would not participate in any projects separating families. Tellingly, this did not mean the company would not work with organizations that may indirectly contribute to the "cruel and abusive" practices. At the end of the bidding process on JEDI, employees at the company released an anonymous open letter calling on the company not to bid on the contract. However, management has resisted this pressure, defending the contract as patriotic.
New Union Movements
Two union movements have sprouted up over 2018 called the Tech Workers Coalition and Tech Solidarity.  Tech Solidarity was formed in 2017, as a reaction to the rise of Donald Trump to the presidency of the U.S.. Their chief worry was that Silicon Valley would bend to the controversial president, who they ideologically opposed. The Tech Workers Coalition formed earlier, and they have so far focused on blue collar workers in the valley. In 2017, they worked successfully with Facebook workers to unionize Facebook cafeteria workers.
The nature of the contract, given the scale of ambition and it's value will provide a major advantage to any company that can obtain it. Given the recency of Cloud Services, the ambition of the project could work to accelerate innovation and provide the winner the chance to increase market share in the industry. Access to the security clearance the project provides also will help the winner compete for other, future Pentagon projects. However, the increasingly controversial nature of the current administration and the military is creating tensions within the largest tech companies. This tension has the chance to open the Pandora's box of unionization, which would threaten the profitability of these organizations and potentially even control of their decision making.This has led the management of the great tech companies in several directions. The management of Google has bent to pressure, and is moving away from controversial contracts. Meanwhile, the management at companies such as Microsoft and Amazon are trying to instill new values of patriotic duty over ethical considerations.
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