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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

June 12, 2013 at 10:12 AM

The secret life of Amazon.com

Amazon.com packages await delivery. (Photo by Paul Sakuma, The Associated Press, 2010)

Amazon.com packages await delivery. (Photo by Paul Sakuma, The Associated Press, 2010)

Nothing shows the evolution of Amazon.com from a cute online retailer to a technology giant than its competition against IBM to land a $600 million cloud computing contract for the Central Intelligence Agency. The Wall Street Journal reports, “Companies like IBM have long supplied the U.S. military and intelligence services with computers, software and the know-how to operate them. Now, new contenders like Amazon are getting into the act, drawn by a fresh source of revenue as business spending on technology remains sluggish and by the imprimatur of providing services to clients that have the highest security standards.”

If the Journal report is true, the competition comes at an awkward time, as revelations about the extent of national security spying on American citizens are the big story. But it also shows that Amazon’s appetites for competition in the technology arena are extremely large — and its expertise is substantial and growing. The Defense Department alone spent about $35 billion on information technology last fiscal year. Adam Selipsky, a vice president at Amazon Web Services, the company’s cloud-computing unit, told the Journal: “The federal government opportunity is enormous. We believe that will be a very significant business for Amazon Web Services going forward.”

There are risks. Even though a Pew Research Center poll shows that 56 percent of respondents are supportive of National Security Agency phone tracking as an anti-terrorism tactic, this could change as more people come to understand the proportions of the spying and how it affects their privacy — and they could turn on a company that wants it all, from selling books and groceries, to becoming a big player in the surveillance state.

The competition is also brisk. Booz Allen Hamilton, the company where leaker Edward Snowden worked, has enjoyed an extremely profitable relationship as a national security contractor. As Michael Hirsh writes in the Atlantic, “Some of America’s biggest social media and tech companies have been denying in recent days that they were aware of the National Security Agency’s recently-exposed ‘PRISM’ and telephone monitoring programs. But these denials obscure a larger truth: The government’s massive data collection and surveillance system was largely built not by professional spies or Washington bureaucrats but by Silicon Valley and private defense contractors.”

Whether Amazon wins this contract or not, it’s clear the company is ready to play a new game. Smile.

And Don’t Miss: The drone corporation | Washington Post

Today’s Econ Haiku:

T-bond yields are up

The markets are uneasy

Get that mortgage now

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