Bloomberg may have launched today"s last hour marketwide buying panic, when it reported that there have been no ongoing talks in the White House about action on Amazon, and it may be Bloomberg that now sinks futures, because in a report that at least partially refutes what it said earlier, according to Bloomberg, tonight President Trump will have dinner with Oracle co-CEO, Safra Catz, whose company is competing with Amazon.com Inc. for a multibillion-dollar Pentagon contract.
Joining them will be Trump supporter and venture capitalist, Peter Thiel, according to Bloomberg"s sources.
While Trump has aggressively attacked Amazon in both tweets and before the press since March 29, sending its market value by as much as $55 billion before Tuesday"s last hour ramp, he has not mentioned the competition to provide cloud computing services to the Defense Department.
That is now changing.
According to Strategas analyst Dan Clifton, "Of all the stories we read [on Wednesday], however, we saw very little attention paid to the one area where Trump could actually hurt Amazon – cloud computing contracts,” Clifton wrote. “Tech companies have been fuming at the possibility of Amazon being the sole company awarded a multi-year cloud services contract at DoD. Congress was forced to intervene in the recent omnibus.”
Clifton adds that, “We believe other tech companies are largely funding [negative ads] to bring attention to the fact that Amazon is about to receive a windfall from the Trump Administration and one that will allow it to squeeze out the other tech companies.”
Indeed, as Yahoo News recently noted, "while regulating Amazon from an anti-trust position by arguing that its retail business is uncompetitive may appear to be outside the current political appetite from DC lawmakers, there is an area of Amazon’s business that Trump could directly, and negatively, impact with haste — Department of Defense contracts."
The president now appears to be doing just that.
The Pentagon intends to award a single company the multi-year contract, plans that have drawn criticism from lawmakers as well as Amazon competitors including Microsoft Corp., International Business Machines Corp. and industry groups that include Oracle. They’re worried the move will favor Amazon, which is dominant in the cloud services market.
After tonight"s dinner, and if Catz plays her cards right, they won"t have to worry any more.
Meanwhile, billions are at stake:
The Washington Business Journal reported that the omnibus spending bill signed by Trump earlier this month contained a provision which requires the DoD to explain why awarding a contract that could run in excess of $10 billion to a single vendor is the best way to execute this plan.
Previously, in 2013, Amazon Web Services won a $600 million contract from the CIA. While the current contract is likely far greater, it suddenly appears much less likely that Bezos will be the winner.
According to Yahoo, Amazon’s cloud business pulled in $17.5 billion in revenue in 2017 and earned the company $4.33 billion in profit, more than the $4.1 billion the company made as a whole. And if Amazon’s tech rivals get Trump’s attention on a potential multi-billion dollar Defense award seemingly destined for Amazon, the President could have an opening to hit his favorite target in its most profitable business unit.
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