Google has scored a major win after Los Angeles City Council voted unanimously to move its email to Google Apps instead of Microsoft Outlook.

The $7.25m (£4.4m) contract will see around 30,000 city employees using Google's email, calendar and instant messaging services, representing the largest municipal win for Google's cloud applications.

"The City of Los Angeles, the second largest city in the nation, made a world-class decision today to support a state-of-the-art email system," said councilman Tony Cardenas, who made the motion to approve the Google system, according to reports in The Los Angeles Times.

The city is replacing its Novell GroupWise system, and had considered a variety of competing platforms.

The contract will be serviced by systems integrator Computer Sciences Corporation, and Google has been asked to improve its security well beyond that which it normally offers to businesses.

The Los Angeles council insisted on a penalty clause, which has yet to be agreed, stipulating that Google will pay out a large sum in compensation in the event of the cloud data being compromised.

In addition, an internal memo (PDF) addressed to councilman Bernard Parks shows that the council wants Google to set up a separate encrypted cloud system for data that can be viewed only by public agencies at a state and federal level.

This will be completely segregated from Google's public cloud servers, and even the company's own administrators will not have access to the whole database and will be unable to decrypt the data. Los Angeles has also asked that the data be stored in widely dispersed servers to minimise the risk if servers get stolen.

The new system will roll out in June to a few departments for testing before going live across the whole city.

"It is unclear whether this is cutting edge, or the edge of a cliff and we're about to step off," said councilman Paul Koretz.

If successful, the contract will be an important win for Google as it seeks to displace Microsoft in the government market. This increasing pressure from Google, and the current growth of open-source government purchasing, may force Microsoft into major discounting.