Trump wanted to personally screw over Amazon in this. He even tweeted about it. I’m not sure what’s left there to speculate but okay.
The cost effective argument doesn’t mean much - there’s something here that makes AWS competitive, including cost, or everyone would just use their competitors.
Disclaimer: I have about equal investments (greater than 1MM) in both companies, so I’m personally not biased for one vs the other.
I’ve been reading Jeff’s letters to the shareholders since the early 2000s. He basically says - we don’t care about optimizing for today. We’re in it for the marathon. Agree with him or not, but I doubt Amazon tried to give expensive pricing to the US government. I would wager they might even offer services at a loss - the profit would come from the long term lock in, not to mention all the government contractors who’d have to follow and use AWS.
You seem to suggest that MS is poor at Cloud game, which is not exactly true. They are cost effective compared to AWS and catching up.
Maybe military wanted to save money. May be this is all about a better deal after all.