Amazon's Political Wipeout

Losing the Pentagon cloud contract highlights the limits of the company’s lobbying clout

- By Eric Newcomer & Spencer Soper

Amazon.com Inc. is an $870 billion company accustomed to winning—and it doesn’t lose quietly. The company on Nov. 14 said it planned to legally protest the U.S. Department of Defense’s decision to award Microsoft Corp. its $10 billion cloud contract to modernize a large swath of the Pentagon’s technology. Microsoft and Amazon had been part of a fierce battle for the contract that had at times in the past two years also included Google, Oracle, and IBM.

It’s easy to see why Amazon might have assumed it had the contract locked up. The company had been seen as such a favorite that the Defense Department was facing a preemptive Oracle Corp. lawsuit for setting up a process that the other company claimed only Amazon could win. And the results don’t reflect a lack of resources or action. Altogether, Amazon spent $4 million on federal lobbying last quarter, the most it has ever spent in a single three-month span. Last year it lobbied more government entities than any other tech company.

In New York City this past winter, Amazon scuttled its plans to build a massive campus just east of Manhattan after encountering greater local opposition than it had expected. In its hometown of Seattle this fall, the company’s efforts to elect a more tax-averse city council backfired, helping more left-leaning candidates win. (Amazon has said it doesn’t consider the New York pullout a defeat but can’t contest that most of its preferred Seattle City Council candidates lost their races.)