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 Amazon.com 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."