America’s Booming Space Defense Business Risks Trouble With China and Russia

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A growing number of companies are racing to get into the space defense business—but a major conflict of interest scandal could be on the horizon.

One such company, True Anomaly, is using artificial intelligence to pilot small satellites that will be able to detect spy satellites from adversaries like China and Russia. In October, True Anomaly—which is backed by U.S. Senator JD Vance’s venture capital firm, Narya—plans to launch two vehicles for the U.S. Space Force on a rocket owned by Elon Musk’s SpaceX.

Companies like True Anomaly have raised concerns about whether the increasingly militarized frontiers of space should be privatized in the same way Musk is turning civilian space voyages into commercial enterprises. While private industry can launch high-tech satellites cheaper and faster than the government, some experts say that commercial space defense has its downsides.

“By outsourcing, it becomes much more difficult to make sure the overriding security interests of military operations can be adequately protected,” Frans G. von der Dunk, a professor of space law at the University of Nebraska-Lincoln, told The Daily Beast. “The private sector focuses on maximizing commercial gain and may well inadvertently or even consciously forego the security risks implied by allowing a private sector entity to decide whom to serve. Military activities are supposed to be undertaken for the sake of protecting the general interests of a people, a State, or a group of those in the context of security, not to make money for investors and entrepreneurs.”

Even Rogers, one of the founders of True Anomaly, said the company could provide space defense technologies that are more effective than the current military systems. The company is building satellites that can get close to the satellites of potential enemies and find information about them or intercept communications.

“True Anomaly is building technologies that contribute to the stability of the space in environment by fielding systems designed to collect information on commercial and adversary space capabilities,” Rogers, a former U.S. Air Force major who developed the Orbital Warfare Doctrine for the U.S. Space Force, told The Daily Beast. “This information reduces the likelihood of miscalculation and escalation and helps the U.S. government make more precise investments.”

True Anomaly is only one of many companies in the space defense business. In the U.S., large defense contractors like Lockheed, Northrop, L3-Harris, Raytheon, and many smaller companies, including Blue Canyon and Maxar, are vying for defense dollars.

Rogers predicted that the space defense industry will grow “exponentially” over the next decade and could achieve a trillion-dollar global market size by 2040.

“At present, the majority of True Anomaly’s technologies are targeting the defense sector,” he added. “However, as launch costs continue to drop and space technologies evolve commensurate with the opportunity presented by reduced costs, the security complexities and dilemmas will grow as a result.”

“Space-based intelligence capabilities… could be used by a wide variety of nefarious actors.”

The nimble private sector can offer real advantages over clumsy government bureaucracy. Svetla Ben-Itzhak, an assistant professor of space and international relations at the U.S. Air Force’s Air War College, told The Daily Beast that privatizing space defense will likely improve efficiency and encourage innovation. She pointed to the success of SpaceX, a private company that contracts with NASA and other federal agencies to design, manufacture, and launch satellites, cargo, and rockets into orbit.

“On the other hand, privatization of space defense can lead to losing a certain degree of direct control,” Ben-Itzhak added. “As private entities become the middleman between the command centers and mission outcomes, the freedom to maneuver, to oversee, and to direct may become more restricted. Delegating space operations, processes, and assets to the private sector can be expected to result in a loss of control over resources and over people: a process that can ultimately take a life of its own that may produce unintended mission outcomes.”

With a record year for both civilian and military space launches in 2022, observers note that more competition among space contractors has its downsides. The U.S. government is competing for launch space with companies sending private satellites into orbit.

“If you’ve got a company that is making money putting payloads in space, how high a priority is to put a particular government payload in when you may have other things that might be more lucrative?” Michael C. Desch, an expert in the space industry who is the Packey J. Dee Professor of International Relations at the University of Notre Dame, told The Daily Beast. “And how do you manage that? Does the government pay a premium to have to queue for the next site? Things get delayed, and I’m not sure if that’s been fully thought through as we increasingly rely on the private sector to boost capacity.”

The rat race

The market for space defense contractors is booming. Iain Boyd, the director of the Center for National Security Initiatives at the University of Colorado, said that with the proliferation of private space companies, it is likely that militaries around the world will increase the use of commercial services for a broad range of activities including various types of imagery and communications.

“This will also motivate companies to develop and implement more sophisticated and capable systems,” he told The Daily Beast.

But the line between military and private satellites is getting blurry. Ukraine, for example, is taking advantage of Elon Musk’s network of Starlink communications satellites in its war with Russia. Boyd said that private satellites could be a valid military target.

“This question has already come up for companies providing imagery to Ukraine in the Russia conflict,” he added. “For Russia to attack a private satellite that is providing information to the public all around the world and to the military of some countries, it is a difficult decision for them to make.”

Business is so good for the space defense industry that companies are seeking to expand beyond the U.S. government as a customer. Aaron Bateman, a faculty member at the Space Policy Institute at George Washington University, told The Daily Beast that some companies are using satellites to detect radio signals around the world. The information that is collected from the satellites can be sold to nearly anyone willing to pay the price.

“So you’re basically doing signals intelligence from space,” Bateman added. “Now, there’s a limited number of organizations that have these capabilities, but in the future, you could see a proliferation of space-based intelligence capabilities that could be used by a wide variety of nefarious actors.”

Up to now, the space defense industry has primarily focused on passive activities like satellite reconnaissance. But space weapons that attack satellites could quickly become an option as competition in orbit heats up with potential adversaries like China and Russia.

“While we can hope that we will not see aggressive military action in the space domain, the recent anti-satellite test by Russia in November 2021—and the increase in the spate of rendezvous and proximity capability demonstrators—suggest that nations are willing to test the bounds of ‘peaceful purpose,’” Michelle L.D. Hanlon, the co-director of the Center for Air and Space Law at the University of Mississippi School of Law, told The Daily Beast. “That there might be an international market for space weaponry is not the most hopeful sign, but it is also not a doomsday indicator.”

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