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The Cloud Computing-Industrial Complex? Eric Gordon, Creative Investment Research

Just five miles from downtown Washington D.C. is Amazon HQ2. Its location symbolizes the tech giant's expanding footprint in government circles, as Amazon Web Services (AWS) continues to secure public sector contracts with substantial implications for national security, data privacy, and the concentration of new technological power. AWS's role as the primary cloud service provider for the US government will increasingly shape policies, operational infrastructure, and public services, bearing great significance for the country given its dominant position in the emerging Cloud Computing-Industrial Complex.

When Amazon began its search for a headquarters expansion location in September 2017, 238 cities submitted incentive proposals that included competitive tax breaks and cash grant offers, anticipating 50,000 new jobs and a local economic boost. By January 2018, only 20 finalists remained, and in November of that year, Amazon announced Long Island City in Queens, New York, and National Landing in Arlington, Virginia, would evenly split the new headquarters. However, faced with significant local opposition in New York (see McCartney), the company redirected its efforts to Virginia alone and initiated the construction of an estimated 6,000,000 square foot office complex at National Landing, home to Pentagon City.

HQ2’s proximity to the hub of the American intelligence community is no coincidence. From Q1 2017 to Q1 2024, AWS has consistently held an approximately 31-33% share of the entire cloud infrastructure market. In that time, Amazon dramatically expanded its operations in one important area: the public sector: the National Security Agency, Department of Defense, Central Intelligence Agency, and Department of the Navy have awarded contracts to AWS worth tens of billions of dollars as part of a larger, government-wide move away from internal server usage towards cloud service providers. Dave Drabkin, a consultant and former procurement official at the DoD and the General Services Administration, claims that Amazon increasingly seeks to “dominate the federal space,” evidenced by the company’s intense recent hiring of “former government officials with acquisition, procurement, or technology adoption experience.”

Amazon has gained a leg-up in the government cloud services contracting fight over the last five years, with industry giants such as Microsoft, Oracle, IBM, and Google Cloud lagging behind. Politico reports that Amazon’s aggressive approach can be traced back to the Defense Department’s unexpected 2019 decision to award Microsoft its Joint Enterprise Defense Infrastructure (JEDI) contract. Although this deal was mired by legal and political challenges until its ultimate cancellation and replacement in 2021 by a multi-company deal, Daniel Ives, Director of Equity Research at Wedbush Securities, claims that “losing JEDI was a black eye for AWS.” It drove the company to “[double] down in terms of hiring and their focus [on] going after federal contracts and agencies.

Democratic Rep. Pramila Jayapal of Washington, who has served on the House Subcommittee on the Administrative State, Regulatory Reform, and Antitrust since 2017, concurred, claiming that the “$10 billion Pentagon deal has created enormous lobbying efforts from Amazon.” Across the political aisle, GOP lawmakers, including Rep. Ken Buck of Colorado and Senator Mike Lee of Utah, argued that Amazon “tried to improperly influence the largest federal contract in history” and has secured a position of dominance to be reined in.

The years that followed the initial JEDI-Microsoft contract have seen AWS work to solidify its status as the powerhouse in government cloud services. In 2022, when the Pentagon introduced JEDI’s replacement, the Joint Warfighting Cloud Capability (JWCC), Amazon was one of four companies awarded the new defense contract. Just two weeks later, Amazon provided the Navy access to its Commercial Cloud Environment, a deal valued at $724 million. Months after that, AWS was re-awarded the National Security Agency’s $10 billion classified “Wild and Stormy” contract as part of its Hybrid Compute Initiative, an evolution of the agency’s GovCloud initiative. This re-award followed a protest against the contract by Microsoft which led the Government Accountability Office to review AWS’s procurement process. Despite the protest and subsequent review, the GAO found no grounds for change and Amazon retained the contract, proving itself once again to be the frontrunner in securing and maintaining high-value cloud computing government contracts, continuing to intertwine itself with the public sector.

In his 1961 farewell address, President Dwight Eisenhower famously warned of the potential establishment of a Military-Industrial Complex. Despite the armaments industry being a necessary evil at the time, he cautioned that “the potential for the disastrous rise of misplaced power exists and will persist.” The 1950s witnessed significant defense spending in response to the heightened Cold War arms race. Eisenhower's warnings have resonated for decades, being applied to public-private partnerships in the prison system, healthcare system, and nonprofit sector, among many others.

On the one hand, AWS and other private cloud computing companies have proven essential to the rapid modernization of our government’s data infrastructure and technological capabilities, especially as advancements in AI and quantum computing require private sector resources built on market-driven innovation. On the other hand, Amazon has pursued an increasingly assertive strategy, expanding its influence within government through aggressive lobbying and strategic hires, indicative of an ambition to dominate the market, influence industry policies, and become generally inseparable from modern government. Given these dynamics, cloud computing could become the next industrial complex.

Having attended the June, 2024 AWS Summit in Washington, D.C., I can attest to the remarkable advancements and potential of cloud computing in transforming government operations. The summit showcased how AWS's cutting-edge technologies are streamlining data management, enhancing cybersecurity, and enabling rapid innovation across various federal agencies. It also emphasized a prevailing belief that transferring critical operations to Amazon and other private cloud computing providers is essential for maintaining America's competitive edge. There was a strong sentiment that the U.S. had initially lagged in the cloud computing revolution, necessitating a sustained commitment to embracing AWS and other private service providers.

While the imminent Cloud Computing-Industrial Complex may be deemed necessary, it should not be overlooked as a cause for concern. As Amazon intensifies its drive for market dominance in the public sector, it increasingly invites public scrutiny. Yet, the opaque nature of government contracting, entangled with political and bureaucratic interests and incentives, means that AWS’s battle for supremacy will largely unfold behind closed doors, remaining out of sight and, regrettably, out of mind for most Americans footing the bill and bearing the long term effects. 


Howard, K. (2023). “The Top Government Contracts Won by Amazon Web Services”. GovConWire.

Lippman, D., Birnaum, E. (2021). “The secret behind Amazon’s domination in cloud computing”. Politico.

McCartney, R., O’Connell, J. (2019). “Amazon Drops Plan For New York City Headquarters”. The Washington Post.

Moss, S. (2022). “NSA re-awards $10bn WildandStormy cloud computing contract to AWS”. Data Center Dynamics.

“President Dwight D. Eisenhower's Farewell Address” (1961). National Archives.

Sperance, C. (2017). “Amazon HQ2 Promotes 50,000 High-Paying Jobs (And A Shock To Your Housing Market)”. Forbes.

Vailshery, S. (2024). “Vendor market share in cloud infrastructure services market worldwide 2017-2024”. Statistica.

Vogel, K., Conger, K. (2021). “G.O.P. Lawmakers Question Amazon’s Connections on Pentagon Contract”. The New York Times.

Eric J. Gordon, Creative Investment Research, 2024

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