The Pentagon said Tuesday it is canceling a cloud-computing contract with Microsoft that could eventually have been worth $10 billion and will instead pursue a deal with both Microsoft and Amazon.

"With the shifting technology environment, it has become clear that the JEDI Cloud contract, which has long been delayed, no longer meets the requirements to fill the DoD's capability gaps,” the Pentagon said in a statement.

Amazon Web Services, a market leader in providing cloud computing services, had long been considered a leading candidate to run the Pentagon's Joint Enterprise Defense Infrastructure project, known as JEDI. The project was meant to store and process vast amounts of classified data, allowing the U.S. military to improve communications with soldiers on the battlefield and use artificial intelligence to speed up its war planning and fighting capabilities.

This year the Pentagon had been hinting that it might scrap the contract, saying in May that it felt compelled to reconsider its options after a federal judge in April rejected a Pentagon move to have key parts of Amazon's lawsuit dismissed.

(With input from agencies)