There’s never been a better time to be in the cloud business—even if you’re not

Amazon. Amazon Web Services has dominated cloud computing

for the past nine years. But Google and Microsoft, both giants in the cloud market, are growing

at a rapid pace. Alphabet, Google’s parent, posted fourth-quarter earnings results t revealing

that Google Cloud generated $8.9 billion in revenue for 2019, an impressive 53% growth

from the previous year. Microsoft’s cloud operation, Azure, grew by 62% in the last

three months of 2019, faster than any other cloud provider.

To truly understand why tech giants are fighting over cloud computing, we have to look back

to the executive retreat at Jeff bezos house in 2003. The Amazon leadership team was asked

to identify the core strengths of the company. One thing became abundantly clear: Its infrastructures

services gave them a huge advantage over their competition.

It was at that point, without even fully articulating it, that they started to formulate the idea

of what AWS could be, and they began to wonder if they had an additional business providing

infrastructure services to developers.

The operating system for the internet

From there, a grander idea emerged: That a combination of infrastructure services and

developer tools could become a pseudo-operating system for the internet. By isolating different

parts of the infrastructure (compute power, storage, and database) as components to the

operating system and having developer-friendly tools to manage them, it was possible to conceive

of infrastructure (especially Amazon’s) as automated and standardized with web services

that can call for more resources. In 2004, the company’s first public acknowledgment

of AWS emerged in a blog post, hinting at the developments to come. and the rest, as

they say, is history. A few years later the company launched their Infrastructure as a

Service. It took time for the idea to take hold, but today it’s a highly lucrative

business. AWS was first to market with a modern cloud

infrastructure service when it launched Amazon Elastic Compute Cloud in August, 2006. Surprisingly,

it took several years before a competitor responded. As such, they control a vast amount

of market share, at least for now. Rest assured, some very well-heeled competitors like Microsoft,

Google, IBM and others are gunning for them.

The Competition Arrives Two years after Amazon Web Services (AWS)

had gone live with its Simple Storage Service, Ray Ozzie, Microsoft's chief software architect,

announced that the company planned to launch its own cloud computing service called Windows

Azure. Ozzie told the crowd, "It's a transformation of our software and a transformation of our

strategy." After the announcement, Microsoft began to

roll out preview versions of its cloud services, and in February 2010, the Windows Azure Platform

became commercially available. Early reviews of the service were mixed, with many analysts

comparing Azure unfavorably with AWS. However, Microsoft improved Azure dramatically over

time. It also added support for a wide variety of programming languages, frameworks and operating

systems, including Linux — something that once would have been unthinkable for a Microsoft

product. Recognizing that its cloud computing service had moved far beyond Windows, the

company renamed Windows Azure as Microsoft Azure in April 2014.

In the years since, Microsoft has continued to expand its cloud capabilities, largely

living up to Ozzie's predictions at the initial announcement in 2008. It has also increased

its support for open source software, and today Azure is a reasonable choice even for

enterprises that don't run Windows servers. Competing closely with AWS,, Microsoft Azure

is one of the unquestioned cloud leaders – and some observers say it has a chance to be the

top cloud vendor, long term.

Competition heats up With Azure’s rise as a very real threat,

AWS showed no sign of backing down. In April 2010, Amazon further expanded its reach setting

up a ‘region’ in Singapore with local data centres. This was the first Asia-Pacific

AWS region, providing better bandwidth and lower latency for their Asian customer base.

This expansion was continued in 2011 with the Asia-Pacific Northeast region in Tokyo,

Japan and 2012 with Asia-Pacific Southeast in Sydney, Australia.

In 2012, AWS also launched its ‘sa-east-1’ region in Sao Paulo, Brazil – the first

South American AWS region. AWS now has over 20 availability zones worldwide, spread across

the US, Europe and the Asia-Pacific region. At the end of 2018, they even announced plans

for data centres in Cape Town, South Africa, putting them in every one of the world’s

continents except Antarctica. AWS now has more than 100 services, providing

everything businesses need to work seamlessly in the cloud. Best of all, they’re constantly

developing new services and features to keep their customers at the forefront of cloud

computing.

AWS vs Azure AWS made waves when it was selected by CIA

for a private cloud contract worth $600 million in 2013. Since then, AWS has been servicing

all 17 US defense intelligence agencies, which has been a huge reason also why AWS is the

market leader. After 4 years of AWS dominance on government

contracts, there was a new opportunity in 2017. Microsoft and everyone else could feel

that this was their chance to dethrone AWS. The contract was Pentagon’s Joint Enterprise

Defense Infrastructure or JEDI for short. To understand why this could be the decider

on who dominates the multi-billion field of cloud computing for years to come, we have

to understand what winning this contract means. You see when Amazon’s won CIA contract,

it wasn’t just one contract they had won, they had won every other major client too.

Because perception around AWS was that if it's good enough for the CIA, it's good enough

for everyone. So thats why when In early 2018, the Pentagon

released its proposal, a 10-year, $10 billion endeavor to modernize the military’s IT

operations, it wasn’t just any other contract, it was an opportunity companies like azure

were long waiting for. Although separate branches of the military

and intelligence communities had been cutting their own cloud deals for years, the new proposal

outlined a unified IT approach for the entire Department of Defense, including classified

and unclassified operations. Notably, phase one language says the procurement

will be a “full and open competition,” perhaps to squash rumors that the department

planned to issue competition-less contract. This set off a showdown among Amazon, Microsoft,

IBM, Oracle and Google for the right to transform the military’s cloud computing systems.

The acrimonious process involved intense lobbying efforts and legal challenges among the rivals.

The Pentagon awarded the contract to Microsoft in late October 2019.

This was supposed to be Amazon’s contract to lose. Amazon practically invented enterprise

cloud computing 14 years ago with AWS. When the Pentagon put out the requirements for

the contract a year and a half ago, some competitors cried foul that it was too tailored to Amazon.

But Amazon believes the decision wasn’t based on merit but rather a personal vendetta.

As you probably have seen from your twitter feed, President trump is not too fond of Amazon

CEO Jeff Bezos. Trump became publicly hostile to Mr. Bezos, who also owns The Washington

Post. The president often refers to the newspaper as the “Amazon Washington Post” and has

accused it of spreading “fake news.” A speechwriter for former Defense Secretary

Jim Mattis says in a book that Mr. Trump had wanted to foil Amazon and give the contract

to another company. The award to Microsoft is likely to fuel suspicions

that Mr. Trump may have weighed in privately as well as publicly against Amazon. Experts

on federal contracting said it would be highly improper for a president to intervene in the

awarding of a contract. Mr. Trump’s vocal criticism of Amazon has

given Amazon ample grounds to protest the award to Microsoft in federal court. Judge

has granted a temporary block on the Jedi contract while the case is sorted out.

But if the previous decision is upheld, Microsoft’s win has implications for the cloud computing

industry, in which businesses rent space on technology companies’ server computers,

giving them cheap and fast access to storage and processing. Amazon has long been the dominant

player, with about 45 percent of the market, trailed by Microsoft with around 25 percent,

said Daniel Ives, an analyst for Wedbush Securities who has closely followed the JEDI saga.

Landing the JEDI contract puts Microsoft in a prime position to earn the roughly $40 billion

that the federal government is expected to spend on cloud computing over the next several

years.