IBM Or Amazon: Whom Will The CIA Choose?

Tyler Durden's picture

Over the weekend we pointed out one of the more disturbing facets of the Snowden espionage affair: the covert, if massive (and very lucrative) symbiosis between private companies, who have explicitly opened up all private client data contrary to privacy disclosures, and a secretly uber-inquisitive government. We asked: "The reality is that while the NSA, which is a public entity through and through, is allowed and expected to do whatever its superiors tell it (i.e., the White House), how does one justify the complete betrayal of their customers by private corporations such as Verizon and AT&T? This may be the most insidious and toxic symbiosis between the public and private sector in the recent past." But while the quid was finally made public (if known by many long ago), the quo wasn't quite clear. It now is - the answer, as as always, is money. And not just any money, but in this specific case taxpayer money paid to either Google or Amazon by none other than the Central Intelligence Agency, or CIA for short. Lots of it.

WSJ closes the full circle on the private information-for-taxpayer cash circle:

The battle between International Business Machines Corp. IBM and Inc. over a $600 million contract to set up a cloud-computing system for the Central Intelligence Agency shows the growing importance of intelligence-agency business for technology companies.

It also shows in whose pocket US corporations truly are, and why when Uncle Big Brother says jump (and hand me over all the data), the IBMs and Amazons of the world are delighted to ask how high.

The background story is well known: "The competition comes amid extraordinary disclosures of secret government-surveillance programs and shows that even in the rarified world of intelligence agencies, companies selling Internet-based cloud-computing services—like Amazon—are challenging the position of traditional technology vendors."

There are many companies suckling on contracts paid for by the government's taxpayer dollar:

Which is why everyone else wants in on a piece of the pie. Like Amazon.

"The federal government opportunity is enormous," said Adam Selipsky, a vice president at Amazon Web Services, the company's cloud-computing unit. "We believe that will be a very significant business for Amazon Web Services going forward."

Significant enough to hand over all related and unrelated "cloudy" data to the client on asap basis? And if not now, maybe tomorrow - after all there is much more deficit spending in the future of the US.

The Defense Department, which manages many of the nation's intelligence assets, including the National Security Agency, spent about $35 billion on information technology in the fiscal year that ended last September, down from the 2010 peak of roughly $38 billion, according to research firm IDC Government Insights.


The rise of cloud computing—where users share space on hundreds or thousands of Internet-connected servers—has created an opening for less traditional vendors.


The CIA surprised IBM earlier this year when it picked Amazon to build a cloud-computing service that would connect the broader intelligence community. The contract could be worth as much as an estimated $600 million over its initial four-year term. A win for Amazon could help unlock doors with other security-sensitive government agencies and commercial clients like Wall Street banks—big, profitable sectors that have long been IBM's turf.


IBM protested the award, and the Government Accountability Office recommended last week that the CIA reopen negotiations. The agency has 60 days to say whether it will follow the GAO's recommendation. "At this time the agency is reviewing details of the GAO decision," a CIA spokesman said.


A spokesman for IBM said the company anticipates the reopening of the contract proposal process. A spokeswoman for Amazon Web Services said it looks forward to a fast resolution of the issues

Amazon may not be profitable, but it sure loves letting the government use its cloud:

In May, Amazon Web Services announced its U.S. businesses received security authorization from the U.S. Department of Health and Human Services to provide some cloud-computing services. The key stamp of approval could help bring more government business to the Amazon unit, which already works with 300 U.S. government agencies including the Treasury Department, Mr. Selipsky said.


IBM is a technology supplier to the intelligence agencies. It sometimes installs software for free, with the benefit being that it gets to test new technology and keep the intellectual property, a person familiar with the matter said. Over the last two years, the NSA and the CIA have been testing parts of Watson, IBM's Jeopardy-playing artificial-intelligence system, the person said.


The New York Times reported the intelligence agencies' testing of Watson earlier.

Who would have thought that indirectly spying on one clients, and not to mention citizens, would become one of the most lucrative revenue streams?

To the CIA we all the best of luck in picking the lucky winner. We also hope the compensation in terms of pieces of silver is 30 with at least eight zeroes behind it, or sufficiently high to allow the CEOs to sleep peacefully at night, under the NSA-super. As for everyone else using "the cloud", be careful when it mutates from Cloud "Nine" to "NSA."

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williambanzai7's picture

I believe there are rules prohibiting the government from replicating anything already available from private contractors. Therein lies the business model.

Jeffrey Bezos: I don't know what Bilderberg is...

Dr. Engali's picture

Everybody keeps talking about these Build-a-Burger people. Are the the "have it your way" people? Do they run a food shop that operates like a Build-a-Bear workshop?

Skateboarder's picture

Build-an-empire workshop. Featuring Crony the Crow.

illyia's picture

We are all data points on someone else's revenue stream...

(Keep working, drone...)

DeadFred's picture

What would the Facebook IPO have looked like if they could have openly claimed .GOV kickbacks as part of their revenue stream?

Lost My Shorts's picture

This article is actually a bit misleading.

Amazon has operated a US federal govt. "region" in AWS for a couple of years.  It's essentially a separate large datacenter for miscellaneous federal customers who are not willing to put their stuff in AWS public data centers.  The CIA private cloud is a smaller version of the same thing -- the CIA would never put its computing actrivities in Amazon's public cloud, so Amazon agreed to build them an exclusive, highly secured data center.

Providing private clouds to the government does not in itself give the government access to data on Amazon's public cloud.  (Of course, the NSA probaby has all the access they want, which is a completely unrelated matter, and it would be true even if the government did not hire Amazon to build private clouds.)  The sensitivity is rather the opposite -- the government worries that using public clouds would expose its data to hacking, so they demand exclusive infrastructure sealed off from the public.

Yes, you could suspect that Amazon would play nice with the feds and give up its customers' data willingly when it is simultaneously seeking billion-dollar contracts with the security state.  And yes, AWS has suffered a bit of a reputation in the past for being a place where some bad guys buy computing power to do bad things.  In webmaster circles, there is a whole sub-culture devoted to tracking AWS IP addresses so they can be blocked from one's servers, on the assumption that anything coming from AWS is likely to be harmful.  AWS users have undoubtedly been of great interest to the feds for a long time, and will remain so.  It's probably true of any public cloud.  So don't expect any privacy from .gov in a public cloud, whether or not the owner does contracts for the feds.  Government access to everything in public cloud computing services was probably an important goal of CISPA.

imaginalis's picture

Instead of them having access to all public data, the public should have access to all spook data. Criminal activity around the planet would diminish rapidly.

ebworthen's picture

The Nazi's chose IBM to track down the firearms and the Jews.

I'd guess IBM if recent events are any clue.

IndyPat's picture

The number code tattoos on Jews arms?
That was Big Blue! Maybe they brought that up in the GAO protest.

Kirk2NCC1701's picture

Do you even know what you're talking about, or just having fun in creative writing?

IBM provided the computing (database & info filtering), but it was the Nazis who engraved the plain, legible numbers (not codes) on the Right Forearm.

Do you even know how many digits these numbers had? Without googling for this?

Kirk2NCC1701's picture


When I was a child, I saw the some forearms of Auschwitz survivors, who where there 1941-45.

If you want to do a bit of research, try these little-know sites:  (List of death certificates, last names starting with A)

If you like, you can copy/paste the data into Excel, convert text to columns, and then sort by town or religion.  Interesting stats.

Roandavid's picture

Where Amazon employs subtle principles of negative selling in an effort to undermine IBM's efforts.

Kirk2NCC1701's picture

Amazing book.  Read about half of it, years ago, before I succumbed to the mountain of info and data.  Amazing research.  Must have had a small army helping the author (Edwin Black).  But some interesting 'takeaways' on corporate games of profit.  Prescott Bush (father of GHW Bush and grandfather of GW Bush) wasn't exactly a saint, as history and records show.

Shizzmoney's picture

Well, you'd figure so......but this time its the Jews who are running the monetary circus, and they *might* have a chip on their shoulder when it comes to IBM lol 

Amazon has been a good corporate partner of the United States.  And by good corporate partner, I mean, been a consisent warden of the consumptiontration camp that is the United States Economy.

lolmao500's picture

While in Kommiefornia...

A growing number of key California cities are a lot worse off than previously thought, thanks to new changes coming in the way state and local governments must account for their pension costs.

The pension changes from Moody’s, and separately the Governmental Accounting Standards Board, scheduled for this month, could result in Los Angeles, San Francisco, San Jose, Azusa and Inglewood joining fiscally troubled Stockton and San Bernardino, among others, as severe credit risks. It's all largely due to soaring employee retirement costs, according to new analysis based on the methodology by Bob Williams and his team at State Budget Solution (SBS), a non-partisan organization that studies state budget crises.

The new rules could nearly double California’s unfunded liabilities to $328.6 billion. Moreover, California cities that have already filed for bankruptcy protection, like Stockton and Vallejo, will fall deeper into the red.

Officials in these California cities did not return calls for comment.

Government retiree costs to date have been improperly underreported nationwide to taxpayers, says Moody’s. New government rules in effect at the end of this month from the Governmental Accounting Standards Board seek to fix this problem, which could show California is worse off than expected. A growing number of Senators also now warn these pension costs could result in a taxpayer bailout of the states.

tip e. canoe's picture

just wait until the local "law enforcement" gets the greedy mitts on PRISM.

will boost those revenues right up...w/ enough to stick a greasy few in those back pockets.

lolmao500's picture

Ain't that nice? The rest of America will be forced to bail out the commies in California... Just like the EU is forced to bail out Greece or Spain or Portugal...  at least in the EU they acted like those countries would have to do something in exchange for money... but you betcha the bailout of commiefornia will be done without any restrictions.

g'kar's picture

That's probably part of the deal for taking in some of those 70,000 Syrian "refugees".

IndyPat's picture

Oh goodie.
Do they get to bring their MANPADS with them?

straightershooter's picture

simple solution: just don't use it.

pitz's picture

Now we know why these companies are propped up by the 'market' with sky-high P/E's (with no relationship to their actual economic productivity or growth rates).  As well as virtually unlimited H-1B visas (despite resume queues that receive literally millions of resumes from qualified software engineers).  They've essentially been crowned TBTF's by the US gov't. 

buzzsaw99's picture

Open the pod bay doors HAL.

jonjon831983's picture

Amongst the scary things out there is what AMZN kindle and I'm guessing other e-books out there are gathering...

old article:


"Your E-Book Is Reading You

Duc888's picture

"The reality is that while the NSA, which is a public entity through and through, is allowed and expected to do whatever its superiors tell it (i.e., the White House)...."


You have that backwards... 


Administrations come and go.  The real power brokers don't.

buzzsaw99's picture

Yep. The White House is a puppet. Anyone who doesn't know that isn't worth reading.

samsara's picture


Look at who comes and goes every 2-6 years,

Look at those who stay in positionis of power.   Benny,  Timmy, Summers  et al

buzzsaw99's picture

Yes, and it is well past the time that I need to stop using the internet altogether. It's just too creepy these days. See y'all at the halliburton death camps.

Nassim's picture

If you seriously wish to protest, start using other search engines, book retailers and so on. Try

Kiss My Icelandic Ass's picture



And how do we know IXQUICK isn't a CIA/NSA/Chinese Government/Google front ?

williambanzai7's picture

Henrique just asked me this on Max Keiser's site:


Here’s a serious question: if the government is downloading stuff you wrote, isn’t that intellectual property theft? Thus, if you can prove that the government intercepted (that is, downloaded) an email you sent, couldn’t you sue them for piracy?

Might be an interesting path to go down – civil suits alleging copyright infringement.

I also wanted to ask this question over at Zero Hedge, but I don’t have access to the Comments section. If someone who does have access would like to do so, please do so.

Read more at 

nobodyimportant's picture

Let me tell you -- if the government does it then it is legal -- remember - they own the courts - they get the verdicts they want regardless of what written law is.  Been there and know how it works.

williambanzai7's picture

Theoretically, this kind of action does not have to be brought exclusively in the US. It could be brought in the EU for example. It could be set up as a civil claim by Kim Dot Com as another example.

nobodyimportant's picture

Yeah well go for it.  I beat my head against the wall for a few years too.  No regrets but got my ass kicked every time in court because the government out lies you.

Totentänzerlied's picture

Nothing personal, they have deeper pockets. Much deeper.

IndyPat's picture

There's a reason why litigation is the sport of Kings

MachoMan's picture

In general:

criminal law = indigent treadmill/spectacle for small fish; and

civil law = the resolution of rich people problems.

There are a lot of people who fall in-between and are largely eliminated from the court system...  I suspect that this unserved mass will decrease over time as the plethora of lawyers gets more and more desperate for clients, but it could also be that small claims courts are expanded accordingly (and jurisdictional maximums are increased) and we let pro se litigants duke it out more in a "bouncy castle" type court.

A Lunatic's picture

The Tyranny for Dummies manual states that once you or your property, be it physical or intellectual, enter the public domain it's all up for grabs. Also, unread intercepts are not violations since the material is still technically private, blah, blah, blah............



James's picture

WB7, the problem W/that is you don't own the origin site where you put the email. Your ISP technically owns all email content by virtue of you placing it on there property.

Same as a graffiti artist suing Bruce Krasting for using his work. The graffiti artist does'nt own the wall, train car,etc.

Crazy huh?

Common_Cents22's picture

if you read the EULA's of various services im sure you gave up any privacy.    who the fuck reads those?  It'd be scary to know what's in em.    We need a open source co-op that reads all that stuff.

A Lunatic's picture

You just need to submit to it so you can find out what's in it.........

MachoMan's picture

Kind of like how you need to pass a law so you can figure out what's in it...

IndyPat's picture

The discovery portion of the case may be tough for the plaintiff, what with the whole national security thing.
Find an attorney with sec clearance and give it a shot.
Imma ask this on Bill Handles radio show, just for kicks

Apostate2's picture

Depends on what jurisdiction. Data privacy law in Hk is very strict but limited liabiliaty (Common Law) might not get at the extent of the commercial violation. Need to protect any email communication with the standard warning that lawyers use as to third party breaches--you know the this email etc. Many universities  and lawyers will state this after their email communications. Not sure this is a 'protection' if the other side of the equation is a spook scoop.