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The First $10B Fallout From Trump War On Big Tech

Tech

Jeff Bezos just cashed out $1.8-billion in Amazon stock. The Department of Justice is launching a broad investigation into tech giants to see if they are hampering competition, and tech executives were recently grilled by a Congressional antitrust subcommittee. Big problems follow big companies, and increasingly it’s looking like a war on oversized tech.

But the biggest fallout came on Thursday, when the Pentagon said it was re-evaluating a landmark, $10-billion cloud-computing contract whose winner was supposed to be announced in a matter of weeks.

Amazon and Microsoft were the finalists.

Now, newly appointed Defense Secretary Mark Esper will now be re-evaluating it, following Trump’s parroting of accusations that Amazon was being favored in the deal for the Joint Enterprise Defense Infrastructure project (JEDI).

The move comes after reports that a conspiracy theory floated by Oracle made its way onto Trump’s desk.

Shortly afterward, Trump suggested that Amazon was part of a conspiracy to use this deal to create a Ten-Year DoD Cloud Monopoly.”

In December last year, Oracle--shut out of the bidding--sued the Defense Department, claiming that the contract was created in a way that favored Amazon. 

On Thursday, Trump said: “I’m getting tremendous complaints about the contract with the Pentagon and with Amazon, they’re saying it wasn’t competitively bid,” Trump told reporters. “We’re looking at it very seriously, it’s a very big contract, one of the biggest ever given.”

JEDI will collect and store sensitive military data and give the U.S. military access to the most advanced technology, including artificial intelligence.

Related: Tesla, Apple Claim China Is Stealing Intellectual Property

Amazon was largely favored to win the deal because of its other cloud deals. Among those is a $600-million CIA contract.

Google withdrew its bid for JEDI after employee protests over producing technology for the U.S. military.

Not only is Amazon facing a re-examination of a contract it was favored to win, but Trump has lined up the accusations in recent months, accusing Amazon of everything from scamming the U.S. Postal Service to calling the Bezos-owned Washington Post a “Russian asset”.

So is that why Bezos just cashed out $1.8 billion in Amazon stock? Probably not, but markets love to speculate and panic. It was, after all, most likely the biggest-ever sale of Amazon stocks. But Bezos sold this stock on a pre-arranged 10b5-1 trading plan, which is intended to avoid any perception of insider trading. Where will it go? That’s anyone’s guess since Bezos is being tight-lipped about it. It could go to Bezos’ Blue Origin space company, which he dumps $1 billion in his Amazon stock earnings into every year.

After the sale, Bezos’ net worth will be about $115 billion, Forbes estimates.

Regardless, news of the $10-billion JEDI contract delay isn’t likely to be music to the market’s ears. On July 23, when the DoD announced its antitrust investigation into big tech, Facebook, Amazon, Apple and Alphabet (Google’s parent company) shed $33 billion from their combined market caps.

For Amazon, the JEDI re-examination announcement comes on the same day as revelations that the Federal Reserve conducted an onsite inspection of an Amazon facility in Virginia, according to WSJ. The examination was said to be a new form of oversight for giant cloud providers housing sensitive banking information. 

It also comes on the same day of reports from the FBI that Amazon drivers were involved in a $10-million theft ring over the past six years. 

By Michael Kern for conil.me

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