Google and Amazon are Working to Loosen Microsoft’s Longstanding Grip on Federal Software Contracts Driven by Elon Musk’s Department of Government Efficiency (DOGE)
According to a Bloomberg report, this effort is taking place in Washington, where lobbyists from Alphabet Inc.’s Google and Amazon.com Inc. believe they have the best opportunity to challenge Microsoft Corp.’s dominance in government software.
By aligning their messaging with DOGE’s focus on trimming costs, they hope to persuade decision-makers that Microsoft contracts lead to overruns and lock agencies into outdated tools.
Musk’s creative DOGE has raised questions about the technology costs of government agencies.
Lobbyists for Amazon and Google, largely through tech trade groups like NetChoice, are amplifying these concerns. They are calling attention to Microsoft contracts, arguing that new solutions can offer better pricing and more modern products.
These lobbyists have reached out to lawmakers informally referred to as the “Core Group of Governors” as well as various federal agency governors.
Microsoft Believes Google and Amazon are Using Backdoor Methods to Obtain Government Contracts
Microsoft spokesperson Alex Haurek stated that these lobbying strategies are not surprising.
In a statement, Haurek described certain industry participants as “attempting to manipulate decision-makers through shadowy front groups, rather than competing transparently on price and quality.”
Google has a clear aim of displacing the traditional systems many government agencies rely on, including Microsoft Outlook and Word. Meanwhile, Amazon seeks to tilt the competitive landscape in cloud computing, a field where it claims Microsoft has employed unfair tactics by bundling software and cloud services.
Some observers believe that Musk’s network of young engineers at DOGE may be open to these changes, as the agency has expressed a mission to overhaul how the government spends its money. Although these companies have historically relied on insider connections, they now find themselves attracting a new group of decision-makers.
Stephen Ehikian, acting administrator of the General Services Administration, is a former software executive. He has met with trade groups to discuss potential changes to how software licenses are purchased.
On March 26, federal chief information officer Greg Barbaccia directed all federal agencies to compile their license inventories with the five largest software providers to the government. At the top of that list is Microsoft. Barbaccia previously worked for Palantir, a company founded by Peter Thiel, and characterized this move as part of an effort to curb what he called “wasteful spending.”
Republican Senator Joni Ernst from Iowa has established the Core Group of Governors in the Senate, advocating for legislation that would allow agencies to consolidate their software licenses and adopt updated enterprise licensing agreements. Ernst cited estimates that this move could save approximately $750 million annually. A version of the legislation was introduced in the House in late March.
Members of NetChoice, which includes Amazon and Google, are leading the charge for new solutions.
In a letter to DOGE in March, NetChoice characterized Microsoft’s role in government software as “monopolistic,” leading to inflated prices and “poor cybersecurity performance.”
Government Accountability Office Report
It is estimated that the government spends over $100 billion annually on software-related projects (including licenses).
Leading software suppliers reported by agencies in the 2021 fiscal year. Source: GAO analysis of agency data.
Microsoft alone accounted for 31% of software licensing expenditures for 24 major federal agencies during the 2021 fiscal year. This total reached $2.4 billion, which is roughly three times that of its closest competitor.
The exact figures for Microsoft’s overall government business are unclear, as the company does not share detailed data. Nevertheless, these numbers indicate that they are substantial for any company seeking to challenge Microsoft’s leadership.
A tech lobbyist working with Microsoft’s competitors is optimistic about Google and Amazon’s opportunities in light of DOGE’s emphasis on cost reduction.
This optimism stems from Musk’s earlier critiques of agencies purchasing software licenses that far exceed the number of actual users in those departments, indicating that too much is spent on these licenses.
Musk mentioned in an earlier podcast with Senator Ted Cruz that “there are too many software licenses and media subscriptions in each government department, far exceeding the number of humans in that department.”
Elon Musk discussed government software spending on Ted Cruz’s podcast. Source: Ted Cruz’s judgment on YouTube.
Google spokesperson José Castañeda stated, “We have said that the government needs more competition to save taxpayer dollars and improve security, so it is not surprising that legacy players prefer the status quo and criticize those who want to change.”
Microsoft Reviews Recent Breaches and Failures
In 2023, state-sponsored Chinese hackers compromised Microsoft Cloud environments, affecting thousands of U.S. government emails, including accounts belonging to then-Commerce Secretary Gina Raimondo.
In April 2024, a government-appointed cybersecurity advisory panel issued a report examining the hack, criticizing Microsoft’s handling of the incident. It noted that the breach occurred prior to a meeting between the then-Deputy Secretary of State and the President of China.
Then, in July 2024, a global failure related to an erroneous update from cybersecurity company CrowdStrike Holdings Inc. was confined to Microsoft systems, halting airline flights and global business operations. Critics seized upon these incidents, suggesting that government reliance on Microsoft poses risks.
Chris Mohr from the Software & Information Industry Association (SIIA) stated in an interview that Microsoft’s dominance “has led to systemic risks.” SIIA counts Google and Amazon among its members. He believes DOGE could more effectively handle software contracts to mitigate cybersecurity threats and cut costs.
In discussions with DOGE, some tech trade groups are solely focused on such solutions.
They are urging the agency to encourage competition among software contracts, claiming it could lower costs and reduce security vulnerabilities. For example, NetChoice proposed measures aimed at curbing what it calls Microsoft’s “predatory” licensing practices, arguing that they prevent agencies from exploring offers from competitors.
According to Amy Bos, NetChoice’s director of state and federal affairs, the organization was encouraged when DOGE indicated it was seeking cost-saving measures in a letter drafted on March 14.
She stated, “We have some perfectly aligned points.” The letter argued that removing Microsoft’s tight control over government software would unlock potential contracts worth billions for other companies. Microsoft rebutted that it earns its share by providing better deals and excellent products.
