Microsoft Loses Another Big Customer To Google

Larry Page closeup

Photo: Justin Sullivan / Getty Images

After more than a year of legal back and forth, the Department of Interior has changed its mind: instead of going with Microsoft’s cloud solution for its 88,000 employees, it will go with Google Apps and Gmail.The news was reported earlier by ZDNet.

The fight started in 2010, when the DoI chose Microsoft’s cloud-based email service. Google and reseller Onix Solutions sued, saying that the agency didn’t offer it a fair chance to compete.

One complaint was that the Microsoft solution hadn’t yet been certified for government security standards, while Google’s had been. (This was later the subject of another nasty fight between the two companies, but Google was right in the end. Since that time, Microsoft’s solution has also been certified.)

Apparently Google’s lawsuit worked. In September 2011, the DoI testified that it was no longer planning to go with Microsoft.

Then, today, the DoI announced it had awarded the contract to Onix and Google after all. The contract is worth $34 million. That’s about $25 million cheaper than the original contract to Microsoft, which means that taxpayers indeed will save money — just as Google said in its lawsuit.

Google said it was “honored” by the win.

Google Apps has managed to get quite a few high-profile wins among governments and schools, and has started to crack other big industries like finance.

But Microsoft’s juggernaut enterprise business is still showing healthy growth, and is the main driver of Microsoft’s growth these days. Still, every little loss hurts.

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at