Judge grants Amazon bid to pause Microsoft's Pentagon contract work

By David Shepardson and Nandita Bose

WASHINGTON (Reuters) – A U.S. judge on Thursday granted Amazon.com (NASDAQ:) Inc’s request to temporarily halt the U.S. Department of Defense and Microsoft Corp (NASDAQ:) from moving forward on an up-to-$10 billion cloud computing deal that Amazon claims reflected undue influence by President Donald Trump.

Amazon, which had been seen as a front-runner to win the contract, filed a lawsuit in November just weeks after the contract was awarded to Microsoft. Trump has publicly derided Amazon head Jeff Bezos and repeatedly criticized the company.

Judge Patricia Campbell-Smith issued a preliminary injunction but did not release her written opinion. She also ordered Amazon to post $42 million in the event the injunction was issued wrongfully.

The Amazon lawsuit said the Defense Department’s decision was full of “egregious errors,” which were a result of “improper pressure from President Donald Trump, who launched repeated public and behind-the-scenes attacks” to steer the contract away from Amazon “to harm his perceived political enemy” Bezos.

Bezos also owns the Washington Post, whose coverage has been critical of Trump and which has frequently been a target of barbs by Trump about the news media.

The ruling is a win for Amazon, but does not indicate one way or the other whether the company will ultimately succeed in getting the court to reverse the decision.

The Pentagon said previously it planned to start work on the contract on Friday.

Amazon shares closed down 0.4%, while Microsoft closed down 0.5%.

As part of the lawsuit, Amazon asked the court in January to pause the execution of the contract, popularly known as the Joint Enterprise Defense Infrastructure Cloud, or JEDI. The contract is intended to give the military better access to data and technology from remote locations.

The Pentagon declined comment on Thursday. Defense Secretary Mark Esper previously has denied there was bias and said the Pentagon made its choice fairly and freely without external influence.

Microsoft said in a statement it was disappointed by the delay, but added: We have confidence in the Department of Defense, and we believe the facts will show they ran a detailed, thorough and fair process.”

Amazon did not immediately respond to requests for comment. The White House declined comment.

Earlier this week, Amazon’s cloud computing unit, Amazon Web Services, said it was seeking to depose Trump and Esper in its lawsuit over whether the president was trying “to screw Amazon” over the contract. Amazon also seeks to question other officials involved in the decision and alleged that Trump had a history of inappropriately intervening in governmental decisions.

The procurement process has been delayed by legal complaints and conflict-of-interest allegations.

The judge told Amazon and the Pentagon to confer by Feb. 27 on what portions of the opinion can be released publicly.

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