Bezos vs. Musk: the showdown in space
Posted on: 8th May 2019
Jeff Bezos and Elon Musk are squaring up to compete for major contracts with the US military.
Bezos’ Blue Origin and Musk’s SpaceX will go toe-to-toe to supply military rockets.
Last summer, US president Donald Trump ordered the creation of a sixth branch of the US military. ‘Space Force’, a space-based US force, will stand “separate but equal” to the Air Force, and clearly marks space as an arena of future conflicts.
Speaking of his plans at the time, Trump said: “This time, we will do more than plant our flag and leave our footprints. We will establish a long-term presence, expand our economy, and build the foundation for the eventual mission to Mars.”
With the creation of Trump’s Space Force, government funding could be the key to winning the private sector space race.
Commercial space companies have been able to bid for US military contracts since 2015, when Elon Musk’s SpaceX successfully sued the Air Force for the right to compete against the longstanding incumbent, ULA. The United Launch Alliance – comprised of Boeing and Lockheed Martin – had previously dominated rocket contracts with little governmental oversight.
When SpaceX broke ULA’s monopoly, the private space sector shifted. Incumbent organisations suddenly had to compete with challengers on price and innovation, and President Trump has been all too happy to let American “rich guys” set the pace.
At a press conference announcing Space Force, Trump teased the tech giants: “If you beat us to Mars, we’ll be very happy, and you’ll be even more famous.”
He added: “They can beat us and we’re taking full credit for it.”
The US military and intelligence agencies currently use SpaceX and ULA satellites for communication infrastructure and surveillance. With Russia, China, and other global powers ploughing huge investment into securing space real estate, the commercial space sector is only set to grow. Current contracts expire in 2022, however, leaving established giants like ULA and the challenger SpaceX to compete with new entrants.
Bezos’ Blue Origin is not as advanced as Musk’s SpaceX, whose Falcon 9 rocket has been around for several years. But SpaceX failed to win initial funding from the Air Force last October, with $2.3bn allocated between Blue Origin, Northrup and ULA. The funds will go towards the development of each firm’s rocket design: ULA’s Vulcan, Blue Origin’s New Glenn and Northrop’s OmegA.
The race is for two slots to supply the US military’s space operations. The Air Force has announced only two suppliers will be chosen, with over $1bn of annual revenue split 60:40 between the winners over a five-year contract. With Bezos and Musk jostling to operate in the same commercial space, whoever fails to win an Air Force contract will face a severe disadvantage.
Of course, there is a chance neither billionaire will win a contract – or even that both make the mark. But with two of the biggest names in business ready to throw down their fortunes and talent, now is not the time to look away from the space race.