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Google has withdrawn its bid for a lucrative $10bn Pentagon cloud computing contract amid concern that the defence contract would contravene its own principles limiting military applications of artificial intelligence.

Thousands of staff had already protested about working on a separate Department of Defense contract and against this backdrop has opted not to proceed further with the Joint Enterprise Defense Infrastructure cloud (Jedi).

The prized contract amounted to a decade of work and could have helped propel Google forward in the cloud computing sector, making up for lost ground with the likes of Amazon and Microsoft which have become market leaders in selling off-site computing to businesses and public agencies.

A Google spokeswoman said: “While we are working to support the US government with our cloud in many areas, we are not bidding on the Jedi contract because first, we couldn't be assured that it would align with our AI principles, and second, we determined that there were portions of the contract that were out of scope with our current government certifications."

Bids were due to be submitted on Friday with Amazon Web Services now the clear favourite to win.

Earlier this week Google called time on its struggling Google+ social network following a data scandal.