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Can technology reshape the Pentagon?

yesshortly after Nancy Pelosi, Speaker of the US House of Representatives, left Taiwan on August 3, China launched a series of war games around the island, which it claims as its own. This was a furious response to Ms. Pelosi’s intentionally provocative act. It was also an attempt to reunify Taiwan with the mainland by force, something China does not rule out. Worrying, then, for Taiwan and its Western backers, that in American simulations of the conflict the Chinese side often prevails. A congressional report in 2018 warned that the United States could face a “decisive military defeat” against China in a battle for Taiwan.

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Since then, China has continued to undermine US military superiority, including its technological advantage. Pushing that edge is therefore a priority for the Department of Defense (namelyEITHERnamely). And that would be easier if America’s world-leading software developers worked more closely with its equally formidable weapons manufacturers, thinks Michael Brown, who heads the department’s Defense Innovation Unit. Katherine Boyle of Andreessen Horowitz, a venture capital (vc) firm, notes that America’s largest weapons manufacturers lack top-tier programmers. Silicon Valley has them in abundance, but it has also long displayed an aversion to battlefield technology.

Now geopolitical conflicts, from Chinese bellicosity to Russia’s invasion of Ukraine, are suddenly making the defense sector look more moral in the eyes of techies. At the same time, technology is changing the way wars are fought. And big tech companies and rudimentary startups alike see the namelyEITHERnamelyThe $140 billion annual procurement budget, plus smaller but cumulatively significant kitties from US allies, are ready to eat.

Giants from Amazon to Microsoft are pitching for namelyEITHERnamely contracts vc Funding for US aerospace and defense startups tripled between 2019 and 2021, to $10 billion (see chart). In the first half of 2022, these companies raised $4 billion, down slightly from the last six months of 2021, but not as sharply as startups overall. On Aug. 8, Palantir, a publicly traded data analytics firm that works with soldiers and spies, reported better-than-expected second-quarter revenue of $473 million, up 26% year over year. The rift between the melting pot of American technology and the Pentagon may, in other words, be coming to an end. Revived bonhomie may reshape America’s mighty military-industrial complex.

the namelyEITHERnamely it played a major role in seeding Silicon Valley’s early technologies, from radar to semiconductors. Lockheed once built missiles in Sunnyvale, wedged between Mountain View (home to Google’s parent company Alphabet) and Cupertino (home to Apple). The Vietnam was changed all that. Antiwar sentiment permeated the lecture halls and faculty lounges of Stanford University, and the garages of today’s startup founders. Protests against the conflict led Stanford to ban classified research and military recruiting at its Palo Alto campus. In 2018, a protest by thousands of Google employees prevented their employer from bidding on a Pentagon cloud computing contract. The search giant’s guidelines for its artificial intelligence (Hears) projects explicitly exclude work related to weapons.

Now two forces are moving the Valley closer to the Pentagon. The first is the growing geopolitical risk. Even before Russia’s invasion of Ukraine reminded the West that big wars could still happen, a growing sense of insecurity was causing countries to beef up their defense budgets. Globally, these exceeded $2 trillion for the first time in 2021. Citigroup, a bank, reckons that 2% of gdp will go from being a largely ignored target for defense spending among NATO members to the alliance floor. That would expand the world market for technology companies that do defense. Christian Brose, chief strategist at Anduril, which makes anti-drone systems and other defense systems, says his firm will look to US allies to fuel growth. Since Ukraine’s inception, several European defense ministries have expressed interest in Palantir data analysis.

The second force is technology. Advanced computing, and in particular Hears, it is reaching weapons and the command and control systems that link them together. So the Pentagon is looking beyond its usual contractors to places like Silicon Valley, whose machine learning abilities put the “mainstreamers” to shame, as defense giants like Raytheon or Lockheed Martin are known. That is one of the main reasons why Ash Carter, Secretary of Defense under Barack Obama, created the Defense Innovation Unit in 2015. “Less of the technology needed by the Pentagon is developed internally and more becomes commercial and dual-use,” explains Brown. .

Instead of buying isolated “platforms” (planes, tanks and other advanced systems), the namelyEITHERnamely would like to build more networks of cheaper battle units. Last year, Israel demonstrated how this could work by deploying swarms of connected drones in Gaza. The Pentagon hopes to do something similar through its Joint Command and Control of All Domains (jadc2), which allows data to be shared between sensors and combat units in real time. This has led to a change in the way the Pentagon views technology, says Raj Shah of Shield Capital, a military organization. vc signature. The future of warfare is “software first,” reckons Palantir’s Seth Robinson.

This is good news for mobile software vendors. Big tech already equips the military and law enforcement with cloud storage, databases, application support, management and logistics tools. It is now approaching the battlefield. Alphabet, Amazon, Microsoft and Oracle are expected to divvy up the $9 billion, five-year contract to operate the Pentagon’s joint warfare cloud capability.jwcc). Last year, Microsoft secured a $22 billion contract to supply its HoloLens augmented reality headset to simulate battles for army training for up to ten years. It is also helping develop the air force’s battle management system, which aims to integrate data sources from across the battlefield. In June, Alphabet launched a new unit, Google Public Sector, which will compete for the namelyEITHERnamelyThe Battle Network Contracts for . In a departure from Google’s earlier wariness of the Pentagon, its cloud chief, Thomas Kurian, has insisted: “We wouldn’t be working on a program like that.” jwcc purely to do back-office work.”

Smaller companies also spy on opportunities. In January, Anduril won a contract to build anti-drone defenses worth $1 billion over ten years. The following month, another startup, Skydio, won one to sell the U.S Drones worth 100 million dollars from the army. Palantir is one of several technology companies with contracts to develop the jadc2 visions. In July C3.ai, a software company that went public in 2020, was chosen by Raytheon to develop Hears for a long-range precision targeting system. Steve Walker, Lockheed Martin’s chief technology officer, says his company is also looking to work with such firms.

Tech’s conquest of the war is far from assured. Previous departures by tech giants to defense have a mixed record. Little seems to have come out of a great namelyEITHERnamely 2015 program, in conjunction with Apple, to develop battle-ready handheld devices. the jwcc The project was revived after an earlier version, called Jedi, was canceled amid lawsuits from Amazon, which had lost the contract with Microsoft. The HoloLens deal has been plagued by delays and has been criticized as wasteful. Despite strong revenue growth, Palantir reported another loss last quarter, disappointing investors who had hoped the 18-year-old firm would finally make money. Its share price fell more than 10%.

Among the upstarts, Anduril and Skydio remain exceptions having won big contracts. Most of the smaller startups, says Ms Boyle, are “waiting to see if they’re going to get a big contract”. A fraction of the trillion dollars the United States has spent on defense procurement since 2016 has gone to unconventional defense contractors. As that turnout increases, the majors, who retain a lot of power (and armies of lobbyists) in Washington, may become less welcoming of newcomers.

Those obstacles can still be overcome. That seems to be of interest not only to tech disruptors but also to the Pentagon. In late 2020, the United States finally defeated China in one of the namelyEITHERnamelythey were games. The winning move was not more and better hardware. It was like the deployment of software-enabled intelligent systems jadctwo.

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