Amazon Acquires Paper Following CIA Contract Dispute

Amazon Acquires Paper Following CIA Contract Dispute

At the end of July, news surfaced about a lawsuit Amazon had filed against the U.S. government. Amazon Web Services (AWS), the company’s cloud computing division, had won a $600 million contract to build an intelligence community cloud system for the U.S. Central Intelligence Agency (CIA), only to have it suddenly withdrawn.

This contract would have been a major addition to AWS’s rapidly growing $2 billion annual business. IBM, a competitor for the same contract, successfully lobbied the Government Accountability Office to recommend that the CIA review the contract. This dispute allowed for a brief glance into a contracting process that would otherwise have proceeded without public knowledge.

It is difficult to imagine any business more politicized than the staggeringly opaque world of classified sector contracting. Approaching this arena with the strategies of a tech-sector mindset results in exactly the kind of headache Amazon has encountered. Paradoxically, the technology background required to build a CIA cloud system is not the skill set necessary to land the contract to build it. Amazon is by no means the first tech company to run into challenges dealing with the U.S. government recently. After spending $2.5 million in 2012 on lobbying alone, Amazon needed a new approach to exercising political influence.

Rather than hire more lobbyists and lawyers to add to the arms race, Amazon founder and CEO Jeff Bezos made a strategic play in line with his patiently innovative business style: he bought the Washington Post, arguably the most influential newspaper in Washington, with all its prestige and network of political contacts sold for the relatively modest price of $250 million. Bezos purchased the Post in his own personal capacity rather than through Amazon, perhaps to avoid justifying to shareholders an acquisition that has been called a “money-losing bastion of the old economy.”

The Washington Post is not a lobbying firm, and political influence is not Bezos’ primary motivation for purchasing it. Many articles are currently circulating that detail the potential business synergies between the Post and Amazon. Yet, it is also worth noting that Bezos has purchased overnight a powerful and complex tool of political influence comparable to years of lobbying work. The battle with IBM over the CIA’s private cloud is just one snapshot of how the Post might be a valuable asset to Bezos.

None of this is to say that Washington Post reporters will be taking direct orders from Bezos or Amazon. However, the mere presence of Washington’s most influential voice for transparency on one side of the negotiating table is enough to keep a federal agency from playing political games with a major contract. A common media narrative has focused on a fear that the Post will be silenced in its reporting on the intelligence community’s activities if Amazon stands to benefit. However, it is also possible that the intelligence agencies, fearing any more bad publicity in what has already been a summer of PR disasters, will be more likely to defer to Amazon in contract negotiations.

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