Amazon shifted strategy in CIA bid

Airbnb: The property-renting marketplace runs most of its Web-based computing on AWS, ramping up its use as its business needs grow.

Netflix: The video-streaming service, a competitor of Amazon’s Prime Instant Video, uses AWS to quickly deploy thousands of servers and terabytes of storage as needed to meet volume.

Pinterest: The online bulletin board for people to share pictures, products, and more runs entirely on AWS.

NASA Jet Propulsion Laboratory: The lab, which focuses on robotic exploration of the solar system, uses an AWS service to process high-resolution satellite images that guide its robots

Obama for America: The president’s re-election campaign team built nearly 200 applications on AWS, including the campaign website, donation processing, and data analytics to maximize fundraising.

SOURCE: Amazon.com

It was a contract that Amazon.com’s business-technology group wasn’t supposed to get.

The CIA, whose data is among the most protected in the world, asked for bids last year on a contract to provide the agency Web-based tech infrastructure. Longtime government contractors — IBM, among others — seemed likely winners.

So when Amazon Web Services won the $600 million contract in January, IBM cried foul. Big Blue argued that the agency did not properly evaluate IBM’s bid; the Government Accountability Office reviewed the contract and agreed in part.

Now, Amazon is bidding again for the contract while also challenging in federal court the CIA’s ability to reopen the bidding.

Both winning the contract and sparking IBM’s ire are coming-of-age moments for AWS. The division, which Amazon launched in 2006, rents data storage and computer-server time to corporations and agencies to run core business processes.

AWS generates roughly $3 billion in annual revenue, according to analyst estimates, by offering services to businesses at a fraction of what it would cost if those businesses owned and ran their own computers.

And it’s emerged as the leader in “cloud computing” — providing Web-based infrastructure technology to customers.

But handling “mission-critical” operations and ultra-secure data isn’t where AWS initially made hay. Some competitors and even some corporate tech buyers still dismiss AWS as technology provided by an online bookseller, suggesting it’s not capable of serving government agencies or companies that manage sensitive data.

So while AWS has run mission-critical operations, a contract from the CIA could put questions to rest. That’s why the contract is so important to Amazon.

If the nation’s top spy agency relies on AWS to secure its network, surely other customers can rely on its technology as well.

“It’s a lighthouse win,” said James Staten, an analyst with Forrester Research. “It will say to other clients that this is safe.”

To be clear, the contract is not exactly the type every customer will get from the company.

AWS typically offers its Web-based services in a “public cloud.” That’s jargon for services that run on computer servers Amazon owns, delivered securely over the Internet.

But the CIA deal calls for Amazon to manage a private data center owned by the agency. There’s no way that the top spy agency would let that data flow over the Web in the same way AWS does for clients such as Airbnb or Netflix. The CIA needs a level of security well beyond what AWS typically provides.

While neither the agency nor Amazon will discuss the specifics of the deal, public documents make it clear that AWS was willing to alter its approach to win this contract. The CIA would be the first AWS client to have the servers that handle its computing on its premises, rather than in buildings owned or leased by Amazon.

It’s not an idle distinction. Amazon has pursued public-cloud computing with a near-religious zeal. Putting any of its technology behind a “private cloud” could undermine that message.