News & Politics

Warning: Amazon’s Effort to Open New Markets Hurts National Defense

On April 11, 2018, I wrote a piece for PJ Media  titled “National Defense Could Be Harmed by Department of Defense Cloud Contract.”  In that piece, I argued “the Department of Defense is considering giving a sole source multi-billion-dollar contract to Amazon to handle all the cloud computing of the Pentagon that is likely to last for ten years.  If this is allowed to be granted, it is likely that national security information would be compromised by aggregating all the cloud computing for the Department of Defense with one single company.”  I wanted to emphasize that aggregating cloud computing with one company may harm national security and it might be wise to diversify the companies providing services to make it harder for hackers to get into the Amazon Web Services (AWS) cloud holding all DOD data.

Amazon may have a bigger problem – they are trying to be everything to everybody.

Amazon is an amazing company and they have put forth a brilliant business model.  So many consumers rely on Amazon to order products online.  Chris Weller in Business Insider wrote on September 7, 2017 that Amazon, “the world’s fourth-most valuable company ships a mind-boggling number of goods to billions of people around the world.”

Weller cites some facts that put the amazing market share and sheer size of the company that blows the competition away.  The company employs 7.5% of Seattle, Washington’s working-age population. Amazon accounts for approximately 43% of all online sales and 1 our to every 4 adults has Amazon prime, accounting for an astounding 1.6 million packages shipped a day. The company has also become automated and 45,000 autonomous robots fetch packages across 20 fulfillment centers and brings them to human employees.  The company is a testament to capitalism and how great a nation the United States is to provide a business climate that rewards innovation and helps consumers.

That being said, Amazon is trying too hard to open up new markets in a short period of time in a way that has imperiled the contract they seek with the U.S. Department of Defense to handle all of the national security data held in the AWS cloud.  The Wall Street Journal reported on November 14, 2017 that Amazon “has sold computing equipment used for its cloud services in China to its local partner, Beijing Sinnet Technology Co., in a move analysts said underscores the increasingly chilly atmosphere for foreign companies in the country.”  This is a big problem because of China’s history of stealing intellectual property and forcing companies to hand over technology as the price of admission to the Chinese market.

President Donald J. Trump has taken action to punish China for a long history of stealing U.S. intellectual property. Reuters reported in January of this year that “President Donald Trump said on Wednesday the United States was considering a big ‘fine’ as part of a probe into China’s alleged theft of intellectual property, the clearest indication yet that his administration will take retaliatory trade action against China.” Trump and his former economic advisor Gary Cohn announced that China had forced many American companies to transfer intellectual property to China as a cost of doing business there. According to the Reuters story “U.S. businesses say they lose hundreds of billions of dollars in technology and millions of jobs to Chinese firms which have stolen ideas and software or forced them to turn over intellectual property as part of the price of doing business in China.” And that is the problem with the Amazon deal with China.

Because China is a known stealer of intellectual property and AWS made a deal to enter the Chinese market for cloud computing, they should be precluded from getting multi-billion dollar contract with the Department of Defense for all cloud computing.  Getting that contract would put American national security at risk.

As much as I love the fact that I can get on my computer and order a product for Amazon to get a product to my door in a day or two, I worry that Amazon is trying too hard to expand to other nations that have a history of cheating on trade deals and stealing American intellectual property. The AWS deal with a Chinese company seems short sighted and should be considered when the Department of Defense decides which company should manage all the defense data in a government secured cloud.  It probably should not be Amazon.

Christian Josi is Founder & Managing Partner of C. Josi & Company a global communications resource firm. Previously, he served as Executive Director of the American Conservative Union, COO of Tea Party Patriots and is a veteran of dozens of local, state and national campaigns.

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