Google, Amazon challenge Microsoft’s hold on federal contracts
Google and Amazon are making a new push to loosen Microsoft’s long-held grip on federal software contracts fueled by Elon Musk’s Department of Government Efficiency (DOGE).
According to a Bloomberg report, this effort is happening in Washington, where lobbyists for Alphabet Inc.’s Google and Amazon.com Inc. believe they have their best chance yet to challenge Microsoft Corp.’s dominance in government software.
By aligning their message with DOGE’s focus on trimming costs, they hope to persuade policymakers that Microsoft’s contracts lead to overspending and lock agencies into outdated tools.
DOGE, which is Musk’s brainchild, has already raised questions about the cost of technology across government agencies.
Amazon and Google’s lobbyists, in large part through technology trade groups such as NetChoice, are amplifying those questions. They are calling attention to Microsoft’s contracts, arguing that new solutions could offer better prices and more modern products.
These lobbyists have reached out to lawmakers known informally as the “DOGE caucus,” along with DOGE contacts at various federal agencies.
Microsoft believes Google and Amazon are using a backdoor approach to gain government contracts
Microsoft’s spokesperson, Alex Haurek, said the company is not surprised by these lobbying tactics.
In a statement, Haurek described certain industry players as “trying to manipulate decision makers, through shadowy front groups, rather than competing transparently on price and quality.”
Google has a clear aim, which is to dislodge the legacy systems on which many government agencies rely, including Microsoft Outlook and Word. Meanwhile, Amazon wants to tilt the playing field in cloud computing, an area where it claims Microsoft has used unfair strategies by bundling software and cloud services together.
Some observers believe that Musk’s network of mostly young engineers at DOGE may be open to these changes, given the agency’s stated mission to overhaul how the government spends money. Though these companies have historically relied on inside connections, they now find themselves appealing to a newer group of decision-makers.
Stephen Ehikian, the acting administrator of the General Service Administration, is a former software executive. He has met with trade groups about possible changes in how software licenses are purchased.
On March 26, Federal Chief Information Officer Greg Barbaccia directed all federal agencies to compile an inventory of their licenses with the government’s five largest software providers. At the top of that list is Microsoft. Barbaccia once worked for Palantir, a firm founded by Peter Thiel, and he framed this move as part of an effort to stop what he called “wasteful spending.”
Senator Joni Ernst, a Republican from Iowa who founded the DOGE Caucus in the Senate, is championing legislation that would make agencies consolidate their software licenses and adopt updated enterprise license agreements. Ernst has cited estimates that such moves could save about $750 million every year. The House introduced its version of the legislation in late March.
NetChoice, whose members include Amazon and Google, has led the charge for new solutions.
In a March letter to DOGE, NetChoice called Microsoft’s role in government software a “monopoly” and said it results in excessive prices and “abysmal cybersecurity performance.”
A Government Accountability Office report estimated that the government invests over $100 billion every year on IT and cyber-related projects, including licenses.
Microsoft alone accounted for 31% of software-license spending by 24 major federal agencies in fiscal year 2021. This total reached $2.4 billion and was roughly three times as much as its closest competitor.
Exact figures for Microsoft’s total government business remain unclear, as the company does not share detailed data. Still, these numbers signal that the stakes are high for any company seeking to challenge Microsoft’s leadership.
One tech lobbyist working with Microsoft’s rivals feels hopeful about chances for Google and Amazon in the face of DOGE’s emphasis on cost-cutting.
That optimism grows from Musk’s earlier criticism of agencies for buying more software licenses than the number of workers who would actually use them, and for spending too much on those licenses.
In an earlier podcast with Senator Ted Cruz, Musk said that in every government department, “there are far too many software licenses and media subscriptions, more than there are humans in the department.”
Verdict with Ted Cruz on YouTube
Google spokesperson José Castañeda stated, “We’ve said for ages that government IT needs more competition to save taxpayers money and improve security, so it’s no surprise that legacy players prefer the status quo and criticize those who want change.”
Microsoft has come under scrutiny from Musk’s circle for recent breaches and failures
In 2023, Chinese state-affiliated hackers compromised Microsoft’s cloud environment, affecting tens of thousands of U.S. government emails, including accounts belonging to then-Secretary of Commerce Gina Raimondo.
There was a report in April 2024 from a government-appointed cyber advisory board that studied the hack and criticized Microsoft’s handling of the incident. It noted that the breach occurred just before a meeting between then-Secretary of State Antony Blinken and Chinese President Xi Jinping.
Then, in July 2024, a global failure tied to a faulty update from cybersecurity firm CrowdStrike Holdings Inc. disrupted Microsoft systems, halting airline flights and business operations worldwide. Critics seized on these events to argue that government reliance on Microsoft poses risks.
Chris Mohr, president of the Software Information Industry Association, said in an interview that Microsoft’s dominance “led to systemic risk.” SIIA has Google and Amazon among its members. He believes DOGE is correct to say that software contracts could be handled more effectively to limit cybersecurity threats and cut costs.
Some of the technology trade groups have zeroed in on just such solutions in their conversations with DOGE.
They urge the agency to encourage competition in software contracts, claiming it can drive down costs and reduce security vulnerabilities. NetChoice, for example, has proposed measures aimed at blocking what it calls Microsoft’s “predatory” licensing deals, which it believes keep agencies from exploring rival offers.
According to Amy Bos, NetChoice’s director of state and federal affairs who drafted the March 14 letter, the group was encouraged when DOGE said it was looking for cost-saving measures.
She said, “We had something that was perfectly lined up for this.” The letter argues that removing Microsoft’s tight grip on government software would unlock billions in potential contracts for other firms. Microsoft counters that it earns its share by offering better deals and superior products.
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Microsoft embraces ‘off-frontier’ AI strategy, prioritizes practicality
Google, Amazon challenge Microsoft’s hold on federal contracts
Google and Amazon are making a new push to loosen Microsoft’s long-held grip on federal software contracts fueled by Elon Musk’s Department of Government Efficiency (DOGE).
According to a Bloomberg report, this effort is happening in Washington, where lobbyists for Alphabet Inc.’s Google and Amazon.com Inc. believe they have their best chance yet to challenge Microsoft Corp.’s dominance in government software.
By aligning their message with DOGE’s focus on trimming costs, they hope to persuade policymakers that Microsoft’s contracts lead to overspending and lock agencies into outdated tools.
DOGE, which is Musk’s brainchild, has already raised questions about the cost of technology across government agencies.
Amazon and Google’s lobbyists, in large part through technology trade groups such as NetChoice, are amplifying those questions. They are calling attention to Microsoft’s contracts, arguing that new solutions could offer better prices and more modern products.
These lobbyists have reached out to lawmakers known informally as the “DOGE caucus,” along with DOGE contacts at various federal agencies.
Microsoft believes Google and Amazon are using a backdoor approach to gain government contracts
Microsoft’s spokesperson, Alex Haurek, said the company is not surprised by these lobbying tactics.
In a statement, Haurek described certain industry players as “trying to manipulate decision makers, through shadowy front groups, rather than competing transparently on price and quality.”
Google has a clear aim, which is to dislodge the legacy systems on which many government agencies rely, including Microsoft Outlook and Word. Meanwhile, Amazon wants to tilt the playing field in cloud computing, an area where it claims Microsoft has used unfair strategies by bundling software and cloud services together.
Some observers believe that Musk’s network of mostly young engineers at DOGE may be open to these changes, given the agency’s stated mission to overhaul how the government spends money. Though these companies have historically relied on inside connections, they now find themselves appealing to a newer group of decision-makers.
Stephen Ehikian, the acting administrator of the General Service Administration, is a former software executive. He has met with trade groups about possible changes in how software licenses are purchased.
On March 26, Federal Chief Information Officer Greg Barbaccia directed all federal agencies to compile an inventory of their licenses with the government’s five largest software providers. At the top of that list is Microsoft. Barbaccia once worked for Palantir, a firm founded by Peter Thiel, and he framed this move as part of an effort to stop what he called “wasteful spending.”
Senator Joni Ernst, a Republican from Iowa who founded the DOGE Caucus in the Senate, is championing legislation that would make agencies consolidate their software licenses and adopt updated enterprise license agreements. Ernst has cited estimates that such moves could save about $750 million every year. The House introduced its version of the legislation in late March.
NetChoice, whose members include Amazon and Google, has led the charge for new solutions.
In a March letter to DOGE, NetChoice called Microsoft’s role in government software a “monopoly” and said it results in excessive prices and “abysmal cybersecurity performance.”
A Government Accountability Office report estimated that the government invests over $100 billion every year on IT and cyber-related projects, including licenses.
Microsoft alone accounted for 31% of software-license spending by 24 major federal agencies in fiscal year 2021. This total reached $2.4 billion and was roughly three times as much as its closest competitor.
Exact figures for Microsoft’s total government business remain unclear, as the company does not share detailed data. Still, these numbers signal that the stakes are high for any company seeking to challenge Microsoft’s leadership.
One tech lobbyist working with Microsoft’s rivals feels hopeful about chances for Google and Amazon in the face of DOGE’s emphasis on cost-cutting.
That optimism grows from Musk’s earlier criticism of agencies for buying more software licenses than the number of workers who would actually use them, and for spending too much on those licenses.
In an earlier podcast with Senator Ted Cruz, Musk said that in every government department, “there are far too many software licenses and media subscriptions, more than there are humans in the department.”
Verdict with Ted Cruz on YouTube
Google spokesperson José Castañeda stated, “We’ve said for ages that government IT needs more competition to save taxpayers money and improve security, so it’s no surprise that legacy players prefer the status quo and criticize those who want change.”
Microsoft has come under scrutiny from Musk’s circle for recent breaches and failures
In 2023, Chinese state-affiliated hackers compromised Microsoft’s cloud environment, affecting tens of thousands of U.S. government emails, including accounts belonging to then-Secretary of Commerce Gina Raimondo.
There was a report in April 2024 from a government-appointed cyber advisory board that studied the hack and criticized Microsoft’s handling of the incident. It noted that the breach occurred just before a meeting between then-Secretary of State Antony Blinken and Chinese President Xi Jinping.
Then, in July 2024, a global failure tied to a faulty update from cybersecurity firm CrowdStrike Holdings Inc. disrupted Microsoft systems, halting airline flights and business operations worldwide. Critics seized on these events to argue that government reliance on Microsoft poses risks.
Chris Mohr, president of the Software Information Industry Association, said in an interview that Microsoft’s dominance “led to systemic risk.” SIIA has Google and Amazon among its members. He believes DOGE is correct to say that software contracts could be handled more effectively to limit cybersecurity threats and cut costs.
Some of the technology trade groups have zeroed in on just such solutions in their conversations with DOGE.
They urge the agency to encourage competition in software contracts, claiming it can drive down costs and reduce security vulnerabilities. NetChoice, for example, has proposed measures aimed at blocking what it calls Microsoft’s “predatory” licensing deals, which it believes keep agencies from exploring rival offers.
According to Amy Bos, NetChoice’s director of state and federal affairs who drafted the March 14 letter, the group was encouraged when DOGE said it was looking for cost-saving measures.
She said, “We had something that was perfectly lined up for this.” The letter argues that removing Microsoft’s tight grip on government software would unlock billions in potential contracts for other firms. Microsoft counters that it earns its share by offering better deals and superior products.
Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot
Read More