Microsoft has won a cloud-computing contract from the Pentagon worth $10bn (£8bn).
The contract is for the Joint Enterprise Defence Infrastructure, dubbed Jedi, is for a 10-year period.
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The project is aimed at making the US defence department more technologically agile.
Amazon had been favourites for the contract amid a heavily scrutinised bidding process.
The bid from Jeff Bezos’ company was criticised by rivals and US President Donald Trump.
It said it was “surprised” by the decision.
A “detailed assessment purely on the comparative offerings” would “clearly lead to a different conclusion”, Amazon said.
Amazon has 10 days to decide whether to challenge the decision and said it will be evaluating its options.
In a statement the Pentagon said all offers “were treated fairly”.
The purpose of Jedi is to replace the department of defence’s ageing computer networks with a single cloud system.
Microsoft will provide artificial intelligence-based analysis and host classified military secrets among other services.
It is hoped the platform will provide the military better access to data from battlefields.