The Pentagon canceled its $10 billion JEDI cloud-computing contract with Microsoft on Tuesday, following a legal battle initiated by Amazon, which has argued the deal involved undue influence from former President Donald Trump.
The Defense Department said it will seek bids from Microsoft and Amazon on a new contract, and reach out to other cloud providers in the next three months if they can meet the government's standards.
The massive cloud project is part of a broader digital modernization of the Pentagon aimed at making it more technologically agile, and Microsoft and Amazon have fought aggressively for the lucrative deal.
The contract was awarded to Microsoft in 2019, but Amazon quickly filed a lawsuit to object. Amazon, which was seen as a front-runner to win the project, has argued the contract process was influenced by Trump, who publicly derided then-Amazon CEO Jeff Bezos and repeatedly criticized the company.
Microsoft shares fell slightly on the news while Amazon's stock rose nearly 5%, its biggest one-day percentage gain since November.