A federal judge has dismissed allegations that bidding for a $10 billion cloud computing contract with the Pentagon was rigged to favor Amazon.

Friday's ruling dismissing Oracle's claims clears the Defense Department to award the contract to one of two finalists: Amazon or Microsoft.

It will be a boon for whichever company gets to run the 10-year computing project, which the U.S. military considers vital to maintaining its technological advantage over adversaries and accelerating its use of artificial intelligence in warfare.

Oracle and IBM were eliminated during an earlier round, but Oracle p...