Fierce Competition For The JEDI Cloud

Amazon Web Services, Inc. (“AWS”) has successfully intervened in Oracle Corporation’s bid protest now pending before the United States Court of Federal Claims involving the Joint Enterprise Defense Infrastructure (“JEDI”) Cloud procurement.  Judge Eric Bruggink granted AWS’s motion to intervene on December 13, 2018 after AWS claimed that it “is entitled to intervene as of right … [and has] timely submitted a proposal in response to the RFP” seeking to be awarded the JEDI Cloud contract.  AWS in support of its motion for intervention noted that “Oracle’s Complaint specifically alleges conflicts of interest involving AWS” resulting in AWS having “direct and substantial economic interests at stake in [the] case”.

Oracle, AWS, IBM and Microsoft all bid on the JEDI contract.  The Pentagon expects to award the contract in April to a single company that will be tasked with building a $10 billion “war cloud”, which would host, process and analyze all levels of classified and sensitive military data worldwide.

The competition for dominance in the cloud is fierce and Oracle has been accused of predatory audit practices in an attempt to boost its cloud sales and compete more favorably against AWS, and other companies.  According to the August 2018 securities class action Complaint brought by City of Sunrise Firefighters Pension Fund in federal court in the Northern District of California, “throughout the Class Period, Defendants [Oracle Corporation and several Board members] falsely attributed the Company’s revenue growth in its cloud segment to a variety of factors and initiatives, including, among other things, Oracle’s “unprecedented level of automation and cost savings,” as well as the Company being “customer-focused” and “intimate partners with our customer.” In truth, Oracle drove sales of cloud products using threats and extortive tactics. The use of such tactics concealed the lack of real demand for Oracle’s cloud services, making the growth unsustainable (and ultimately driving away customers). Among other things, the Company threatened current customers with “audits” of their use of the Company’s non-cloud software licenses unless the customers agreed to shift their business to Oracle cloud programs.” Complaint at ¶ 5.

Tactical Law will continue to monitor the Oracle bid protest as well as the City of Sunrise Firefighters' Class Action.  Please check back for periodic updates.