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The Morning Download: Pentagon Deal Adds Force to Shifting Cloud Market
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Good morning, CIOs. Friday's installment of the ongoing Cloud Wars saga signals saw long-favored Amazon losing out to Microsoft for JEDI, the lucrative Pentagon cloud contract. It's a sign that the competitive dynamics in the cloud are changing, with possible implications for business users.
Disturbance in the force. The Wall Street Journal's Aaron Tilley notes that the awarding to Microsoft of the Joint Enterprise Defense Infrastructure contract came the same week both companies reported earnings. Microsoft said sales for its Azure cloud business grew 59% in the quarter compared with the year prior. For Amazon Web Services, or AWS, quarterly sales grew 34.7% from a year earlier.
Empire strikes back. The contract "might help Microsoft overtake Amazon to become the No. 1 cloud vendor," Holger Mueller, principal analyst at Constellation Research Inc., tells Mr. Tilley. But to be sure, Amazon remains the top cloud provider. It had 31.5% of the cloud market share in the previous quarter compared with Microsoft's 18.1%, according to analysis firm Canalys. See below for more on the JEDI saga.
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An air taxi vertiport in Singapore, Oct. 21, 2019 PHOTO: COVER IMAGES/ZUMA PRESS
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MIT on the work of the future. The university last year convened a task force to address what might be the most critical question of the digital economy: As emerging technologies raise aggregate economic output and the wealth of nations, will they also enable people to attain greater economic security and improved health and longevity? CIO Columnist Irving Wladawsky-Berger has more.
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The Pentagon’s JEDI cloud-computing contract was hotly contested between Microsoft and Amazon. PHOTO: STAFF/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Pentagon picks Microsoft over Amazon for cloud contract. The Joint Enterprise Defense Infrastructure contract, or JEDI, could be worth up to $10 billion to Microsoft over a 10-year period, The Wall Street Journal's John D. McKinnon and Aaron Tilley report.
About JEDI. The Pentagon has more than 500 separate clouds. JEDI would serve as an umbrella system to rationalize that number and provide the military with access to services that better keep up with the pace of technology in civilian markets.
Color Amazon surprised. Amazon.com was considered the front-runner for the contact. "AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion," the company said in response to the decision.
A saga to say the least. The cloud selection process has been fraught with multiple conflict-of-interest allegations and legal challenges, as well as concerns that opting for a single-source vendor might not be best for the military, the WSJ reports.
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Oracle filed a legal challenge at one point with the U.S. Court of Federal Claims.
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There were concerns over the presence of a former AWS staffer helping the Pentagon guide the decision (he was since returned to AWS).
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Defense Secretary Mark Esper announced his own top-to-bottom review in early August, after President Trump voiced concerns about JEDI and Amazon—the president has frequently slammed billionaire Jeff Bezos, as well as Amazon and the Washington Post, which he owns.
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Streaming wars demand tech recruits. Streaming video services are fighting for software engineers, data scientists and other tech professionals, says The Wall Street Journal's Sarah E. Needleman.
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Los Angeles-based Quibi Holdings LLC has hired roughly 185 people in the past year, mostly tech professionals.
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Hulu employs about 900 tech professionals and has openings for 70 more.
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At streaming companies, base salaries for senior tech jobs tend to be 10% to 15% higher than they are for similar jobs in industries such as banking and health care.
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“We need a web of the people, not a web of the corporations”
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— Christian Fuchs, a media professor at the University of Westminster in London, on big tech's domination of the internet
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‘A lot of advancements in AI and machine learning are changing the way these planes are maintained,’ Mr. Sundaram says. PHOTO: SETH WENIG/ASSOCIATED PRESS
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What JetBlue is doing in Silicon Valley. The airline started a venture-capital arm to invest in startups looking to bring fresh ideas to air travel. CIO Journal's Agam Shah spoke recently with Eash Sundaram, chief technology officer of JetBlue Airways and investment-committee member for the venture operation, JetBlue Technology Ventures.
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Q:
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Why does an airline need a presence in Silicon Valley?
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A:
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The speed to market at which new-generation companies are coming in travel, hospitality and tech spaces is super amazing. When you think about the last five to seven years, companies like Airbnb and Uber, even the supercharged growth of Expedia, is happening through the tech space in the valley. We want to have a seat at the table and be the disrupter into the future.
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Q:
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Are certain innovations crucial to you?
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A:
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One is the way we manage customer experience. It’s also very critical for JetBlue to preserve our cost base and manage it better. Maintenance planning not only drives significant cost but also is key to the safety and security of the airline. A lot of advancements in AI and machine learning are changing the way these planes are maintained, how these planes are scheduled.
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The drones are coming! Flying robots that deliver packages to people’s doorsteps are no longer science fiction. Companies including Amazon, Alphabet’s Wing and Uber are starting the most advanced trials of drone delivery in U.S. history. The Wall Street Journal's Sebastian Herrera and Alberto Cervantes provide readers with a drone-spotting guide
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Amazon says its hexagonal design allows the drone to switch between a vertical helicopter-like mode and a horizontal airplane mode. The hexagonal wings help stabilize the drone in gusty winds and double as a shroud to protect the six propellers, Amazon says.
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Wing’s drone looks more like a small plane. Its two wings, extending more than 3 feet, each feature a propeller and allow the drone to fly further while conserving energy, the company says.
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Uber is using a drone built by another company. The modified AR200 by AirRobot has limitations, flying slower than the other drones and with a more limited range.
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A UnitedHealth spokesman said the algorithm was only one part of a far broader tool it offers to help analyze patients’ health needs. PHOTO: MIKE BRADLEY/BLOOMBERG NEWS
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New York regulator probes UnitedHealth algorithm for racial bias. New York’s insurance regulator said it is launching an investigation into a UnitedHealth Group Inc. algorithm that a study found prioritized care for healthier white patients over sicker black patients. According to the study, published in the journal Science on Thursday, the algorithm uses past medical use and spending to predict patients’ future health-care costs, then uses cost to rank their medical needs. But spending for black patients is less than that for similar white patients, giving healthier white patients an edge. Dozens of hospitals and insurers in the U.S. use the Optum tool to identify diabetes and other chronic-disease patients. (WSJ)
Tech firms ramp up lobbying as antitrust scrutiny grows. Lobbying expenditures by Facebook, Amazon and Apple are on pace to hit record highs this year. Facebook increased spending by nearly 25%, to $12.3 million, through the first nine months of the year over the same period in 2018, Amazon notched a 16% jump to $12.4 million. Apple boosted spending by 8% so far this year, and Microsoft by 9%. (WSJ)
Google announces search algo tweak. Top Google executives, in a media briefing Thursday, said they had harnessed advanced machine learning and mathematical modeling to produce better answers to complex search queries. Google said one in 10 queries would see better results. (WSJ)
State Street shakes up tech. The Boston-based investment bank announced the departure of CTO Antoine Shagoury, the latest in a series of high-profile departures, including Moiz Kohari, former chief architect. (The Trade)
Toyota eases into the self-driving lane. The auto maker next year will release its first “Level 2” autonomous car, able to drive itself on the highway. (Reuters)
Pentagon courts domestic chip makers. Recent tensions in China is spurring the Defense Department to look reconsider its dependence on a computer chip supply chain where the majority are made overseas, especially in Taiwan. (New York Times)
Former White House infosec staffer warns of risks. A departing White House cyber expert warned in a memo that the White House is leaving itself open to being compromised. Axios reported last week that "at least a dozen" cybersecurity officials have left or been pushed out of mission created under Barack Obama to stop Russian hacking. (Axios)
Schooled by We. After suffering billions of dollars of losses on its investment in WeWork, SoftBank’s Vision Fund is scaling back its high-risk investing strategy and focusing more on improving corporate governance at portfolio companies. Since launching three years ago, the fund has invested close to $85 billion, owning stakes in some of the most high-profile startups globally. (WSJ)
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Everything Else You Need to Know
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California’s governor declared a state of emergency as a wildfire north of San Francisco burned nearly uncontrolled and millions of people were left without power as utilities tried to prevent more fires. (WSJ)
Abu Bakr al-Baghdadi, who led the terrorist group Islamic State, killed himself and several of his children in a suicide blast during a U.S. military raid in Syria, President Trump said at the White House. (WSJ)
The European Union agreed to extend the Brexit deadline until Jan. 31, opening the way for an early U.K. election if Prime Minister Boris Johnson can persuade opposition parties to agree to hold one. (WSJ)
Tiffany has received a takeover approach from LVMH Moët Hennessy Louis Vuitton, which is seeking to add the iconic U.S. jeweler to its portfolio of upscale brands. (WSJ)
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