Microsoft officials announced Tuesday that the company had achieved the required security levels to host secret U.S. military and intelligence data on its could computer network, Azure, and claimed they were on track to to host “top secret” information soon. The developments put the computer giant in closer competition with cloud rival Amazon to handle the government’s most delicate and important information and perhaps to vie for the Pentagon’s coveted nearly $10 billion cloud contract known as JEDI.

Microsoft offers a variety of services for Azure customers allowing them to use their cloud data from machine learning to artificial intelligence and analytics, in addition to media tools and integration with Internet of Things devices.

Within months, government agencies and workers could run their secret data through those applications.

“We’re taking our public cloud Azure and sending our FedRamp moderate coverage to cover 50 of those services,” said Julia White, corporate vice president of Microsoft Azure, referring to cybersecurity framework for cloud hosting for government. “By the end of the calendar year, those 50 services will have FedRamp high certification.”

Competing for government-sized cloud contracts is s a big step forward for Microsoft, which remains publicly recognized by its Windows operating system and popular applications like Word that run on laptops and PCs. The emergence of cloud services, especially free ones like Google Docs, presented a big challenge to everything that Microsoft was about.

White says Microsoft is well positioned to take advantage of where computing is today, with enterprises and agencies wanting to storemore information on the cloud but with lots of data of various formats still stuck inside on-premises machines.

The Internet of Things, or IOT, is composed more and more of devices that send data to the cloud but also keep and use it. It is a world of machines that possess lots of innate capability and more memory, even rudimentary artificial intelligence, because of advances in the miniaturization of computer components.

“IOT is maturing, evolving. [Devices] are getting far more sophisticated, they’re able to run real applications on these little devices,” said White.

The developments are giving rise to highly-complex “hybrid” environments with lots of data sitting on old computers and in data centers, lots of additional data going to the public cloud, and lots of smart devices holding and broadcasting data. The challenge is to provide the same level of service, the same cool apps and programs, to customers that are keeping more of their data in so many different places, says White. “We’ve built toward this hybrid approach,” she says, with services that can run on premises machines as well as in the cloud. They even sell enormous databoxes, like digital treasure chests, that can transport data from one place to another.

Amazon is still a much bigger cloud provider than Microsoft at about four times the revenue, though that percentage is shrinking. They’ve also got an enormous developer community constantly making new programs and services to experiment and play with data.

Some concerns have been growing about Amazon in the national security community. Last November, someone in the military accidently left nearly 100 GB of classified data on the public facing AWS portal. It was user error, not a hack or unknown security flaw of Amazon’s. But it still represents a problem for Amazon, which places control and management responsibility in the hands of the customer —as in, operators or developers whose specialty is not managing a complex cloud environment.

Both Microsoft and Google have put additional processes in place to protect their cloud from user error. “While you have control over the environment that you’ve created in Azure, a virtual machine can only be turned on if it has this set of security capabilities around it… even things like ‘who can access this type of application’ can be preconfigured with these policies.”

But Google on Monday announced that they would drop out of the competition, citing an inability to meet the security levels required and because they could not be “assured that it would align with our AI Principles," according to a Google spokesperson.

Google’s abdication leaves Amazon and Microsoft as the two most likely contenders for the JEDI contract.