The 10-year contract, which is intended to transform and modernise the US military's cloud computing system, is considered significant, owing to its centrality to "new forms of war". Presently, much of the US military operates on computer systems from the 1980s and 1990s.
The Pentagon chose Microsoft's Azure cloud for the job, saying that the company would help improve the "speed and effectiveness with which we develop and deploy modernised technical capabilities to our men and women in uniform."
The decision had come as a surprise to Amazon, given that the company was considered a front-runner to win the contract, while Microsoft was considered in the lead for other government cloud programmes, including an intelligence contract.
Amazon Web Services "is uniquely experienced and qualified to provide the critical technology the US military needs, and remains committed to supporting the (Department of Defense's) modernisation efforts," an AWS spokesperson said in a statement.
Recently, a book written by the speechwriter for former Defence Secretary James Mattis has claimed that that Trump had directed Mattis to "screw Amazon" out of Pentagon's USD 10 billion cloud computing contract.
Trump in the past has voiced his displeasure with Amazon and Jeff Bezos, who also owns The Washington Post. He has accused Amazon of taking advantage of the Postal Service even as independent investigations have disagreed with it.