The rumors are true. Amazon is providing cloud services to the CIA. But what’s most intriguing about the multi-million-dollar deal is not what Amazon is doing, but how the company is doing it — and what that means for the future of that thing called cloud computing.

Word of the deal broke in mid-March by way of a publication called FCW, which reported that the king of cloud computing had inked a contract with the Central Intelligence Agency to provide cloud services over the next decade. Amazon finally confirmed the deal, if not the price tag, last week after rival IBM filed a formal protest over the pact.

The deal was big news across the web. Amazon, pundits said, had stepped up its effort to challenge old-school giants like IBM in an area the old guard had long dominated federal contracting. The chorus of voices swelled Friday when the General Accounting Office responded to IBM’s protest with a ruling that said the CIA chose Amazon over Big Blue due to a “superior technical solution.” But Amazon’s CIA contract is important for far bigger reasons, and marks a much bigger shift than most people realize.

You see, the GAO ruling on the matter reveals that the contract involves Amazon building cloud services inside CIA data centers. “The contractor generally was to provide a copy of its existing public cloud (modified where necessary) to be installed on government premises,” the GAO ruling explains. That may seem like a small thing, but in the world of cloud computing, it’s a seismic event.

For years, cloud computing has been defined by sharp contrast in philosophy. New-age companies like Amazon and Google said computing power should be offered over the internet, much like electricity is offered over the grid. This, they said, was cloud computing. But old-school companies like IBM and HP — companies threatened by this new way of doing things — urged businesses to duplicate cloud computing services like Amazon EC2 and Google Compute Engine inside private data centers, arguing that this provided greater security and privacy. You could still have cloud computing, the old guard said, without the public internet.

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