While Microsoft slugs-it-out in the CES arena, Google won temporary relief in its cloud-war against Microsoft as it restricted the U.S. Interior department from handing a $59 million contract to Microsoft.

Bloomberg reported that federal judge Susan Braden in Washington restrained the federal department from handing the email and collaboration services contract to Microsoft which would have awarded it 88,000 employee email accounts.

Google had filed a lawsuit against the Interior Department in October 2010, claiming that it was unduly restricted from applying for the contract, as the tender issued by the department carried a clause that required the offering to be part of Microsoft Business Productivity Suite.

The judge stated: Without a preliminary injunction, the award will put into motion the final migration of Interior's e-mail system, achieve 'organizational lock-in' for Microsoft, and cost Google the opportunity to compete.

Microsoft and Google are locked in a tussle to acquire cloud-based deals at federal, state and local government levels.

Recently, the White House Office of Management and Budget (OMB) adopted a cloud-first policy as part of its IT strategy for government agencies. In order to reduce the budget deficit, the government agencies are due to incorporate spending cuts and restructuring entire operations. The target of its default 'cloud first' policy is to reduce data center size by 40 percent which would result in consolidation of 2,000 government data centers resulting in cost savings and increased efficiency.

However, the government strategy to migrate to the cloud has pitched the two IT behemoths against each other to get a pie in the cloud. Here is a list of major federal, municipal and state cloud contracts won by Google and Microsoft in 2010:

Microsoft:

-- US state of Minnesota became the first state to move a large collaboration and communication suite in a private cloud environment. It switched its Exchange email servers to Microsoft's Business Productivity Online Suite (BPOS). The state of Minnesota moved 30,000 government email users to the cloud. It is a five-year contract valid until 2015.

-- New York Mayor Michael Bloomberg and Microsoft CEO Steve Ballmer announced an agreement in October which would enable 100,000 city employees to move to Microsoft cloud-based applications. The agreement is for five years and will ensue $50 million in savings for New York City.

-- Microsoft and State of California agreed on a $50 million three-year contract, under which Microsoft and CSC will assist the state to migrate its official email - 80 of the emails were hosted on Microsoft Exchange Servers - to Microsoft Business Productivity Online Suite (BPOS). The migration will lead to elimination of 130 email systems.

-- Microsoft won a deal with the Department of Agriculture (USDA) under which it will move 120,000 of its employees to messaging, conferencing and document sharing over the cloud. The deal is worth $27 million and is for a period of three years and will result in savings of $6 million per year for USDA.

Google:

-- Google entered into an agreement with City of Los Angeles under which more than 34,000 city employees will move to Google Apps. LA has more than 40 departments and the city officials expect $5 million in savings over a 5-year contract.

-- The Colorado Statewide Internet Portal Authority (SIPA) selected Tempus Nova, a Google Enterprise solution provider, for a state-wide cloud-computing project. The agreement gives Google access to some 300,000 accounts.

-- Multnomah County, Oregon and Google agreed in October to move about 3,500 county employees to Google Apps resulting in savings of $100,000 each year. The move involved migrating accounts from Microsoft Office.

-- Wyoming State signed a deal with Google to migrate 10,000 employees from its state agencies to Google Apps. The move is due to save the state $1 million annually.

-- In December, the General Services Administration (GSA) awarded Google a $6.7-million five-year contract to deploy Google Apps for its 17,000 employees.