By David Shepardson and Nandita Bose
WASHINGTON (Reuters) - A U.S. judge on Thursday granted Amazon.com (NASDAQ:AMZN) Inc's request to temporarily halt the U.S. Department of Defense and Microsoft Corp (NASDAQ:MSFT) from moving forward on an up-to-$10 billion (£8 billion) cloud computing deal.
Amazon filed suit in November alleging that President Donald Trump, who has publicly derided Amazon head Jeff Bezos and repeatedly criticized the company, exerted undue influence on the decision to deny it the contract.
Bezos also owns the Washington Post, whose coverage has been critical of Trump and which has frequently been a target of barbs by Trump about the news media.
Judge Patricia Campbell-Smith issued the preliminary injunction but did not release her written opinion. She also ordered Amazon to post $42 million in the event the injunction was issued wrongfully.
The Pentagon said previously it planned to start work on the contract on Friday.
Amazon shares were flat on the news, while Microsoft was down 0.4%.
As part of the lawsuit, Amazon asked the court in January to pause the execution of the contract, popularly known as the Joint Enterprise Defense Infrastructure Cloud, or JEDI. The contract is intended to give the military better access to data and technology from remote locations.
The Pentagon declined comment on Thursday, but Defense Secretary Mark Esper has denied there was bias and said the Pentagon made its choice fairly and freely without external influence.
Microsoft said in a statement it was disappointed by the delay, but added: We have confidence in the Department of Defense, and we believe the facts will show they ran a detailed, thorough and fair process.”
Amazon did not immediately respond to requests for comment.
Earlier this week, Amazon's cloud computing unit, Amazon Web Services, said it was seeking to depose Trump and Esper in its lawsuit over whether the president was trying "to screw Amazon" over the contract.
Amazon also seeks to question other officials involved in the decision and alleged that Trump had a history of inappropriately intervening in governmental decisions.
The procurement process has been delayed by legal complaints and conflict-of-interest allegations.
The judge told Amazon and the Pentagon to confer by Feb. 27 on what portions of the opinion can be released publicly.