Amazon.com Inc. topped its own previous record on lobbying in the first quarter as it came closer to winning a controversial $10 billion Pentagon cloud contract and outspent Alphabet Inc.’s Google for the first time in more than a decade.

The online business-t0-business and retail giant, which has rapidly expanded its Washington influence operation in recent years but lagged behind Google in total outlays, spent $3.9 million in the first three months of 2019, up from $3.4 million a year earlier, according to disclosures filed with Congress in advance of Monday’s deadline.

Amazon became the top spender among American technology companies in the quarter as Google’s lobbying outlay dropped to $3.4 million from $5 million a year earlier. Facebook Inc.’s spending crept up to $3.4 million in the first three months, from $3.3 million. Amazon topped its previous company quarterly record from the last quarter of 2018, when it spent $3.7 million. The disclosures cover spending through March 31.

The tech companies’ lobbying trends emerged after the Democratic takeover of the House sparked a reshuffle on K Street, with companies seeking to appeal to the new leadership and address a new congressional agenda focused on issues including health care and prescription drug prices, trade deals, privacy and investigations of President Donald Trump.

Cloud Competition

Four tech giants involved in the Pentagon’s winner-take-all competition for cloud services all increased lobbying spending significantly in the first three months.

Amazon is now one of two finalists, alongside Microsoft Corp., that edged out Oracle Corp. and International Business Machines Corp.

Microsoft, meanwhile, has been showing more strength in its own cloud technology business.

For Microsoft’s fiscal third quarter ended March 31, the company said revenue from its cloud products surged from a year earlier. “Demand for our cloud offerings drove commercial cloud revenue to $9.6 billion this quarter, up 41% year-over-year,” Amy Hood, executive vice president and chief financial officer, said in a prepared statement today. “We continue to drive growth in revenue and operating income with consistent execution from our sales teams and partners and targeted strategic investments.”

Microsoft also said its total Q3 revenue increased 14% to $30.6 billion, as net income rose 19% to $8.8 billion.

Microsoft Azure’s momentum

Microsoft’s Intelligent Cloud division accounted for 29.2% of the company’s 2018 revenue, according to Bloomberg data, up from 25.3% in 2015. KeyBanc Capital Markets’ Brent Bracelin wrote that the cloud business had “structurally improved Microsoft’s growth trajectory,” creating the prospect of sustained double-digit annual growth. Goldman Sachs wrote that Azure’s positive momentum is “enabling the company to significantly outpace the overall market’s growth.”

Earnings are seen rising 4.9% in the quarter, while revenue gains 11.3 percent. That represents the slowest quarterly pace of year-over-year revenue growth since 2017, per Bloomberg data, but Mizuho Securities called it strong “for a company its size.”

Oracle—which spent $1.3 million during the quarter, up nearly 9% from a year earlier—has waged a court battle over the bid, alleging that the process was marred by conflicts of interest and unfair requirements that favored Amazon. Microsoft spent $2.8 million on lobbying, up 21% from a year before, while IBM spent $2 million, an annual increase of more than 35%, the records show.

Amazon, which lobbied more government entities than any other tech company in 2018, is now pushing to consolidate its influence, brushing aside trade groups it doesn’t like, creating new ones it does, and sending senior executives to woo antitrust enforcers.

The B2BecNews editorial staff contributed to this report.

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