When Silicon Valley and the Pentagon Start Working Together Again

Faÿçal Hafied

4 mins - 5 de Julio de 2023, 07:00

Innovation and defense have often been indivisible. To avoid “technological surprise” from adversaries and maintain a decisive advantage in the battlefield, investment in defense innovation has been one of the instruments of “American hyperpower”. Innovations in the defense sector are also of interest to the civilian sector, and many innovations have emerged from it, from the Internet to GPS and voice recognition technologies. These are known as “dual use” technologies, i.e., technologies that have both civilian and military applications.

[Recibe los análisis de más actualidad en tu correo electrónico o en tu teléfono a través de nuestro canal de Telegram]

The State invests in defense innovation through several privileged instruments: public procurement, subsidies, but also through the creation of agencies dedicated to breakthrough innovation for military applications, such as the US Darpa agency, created after the trauma of the USSR’s launch of the Sputnik satellite in 1957. Current geopolitical tensions are leading to a further increase in public spending on defense innovation ($34 billion in the USA in 2022 – five times that of France, the EU’s largest defense budget – and this spending will rise by a further 18% in 2023).

However, the paradigm of cutting-edge innovation stimulated by military spending and then spilling over into civilian applications has become more fragile, and governments are now looking more for civilian innovations that can be converted into military applications. In the United States, the sometimes-stormy relationship between Silicon Valley and the Pentagon is becoming closer. As the cradle of the progressive counterculture, San Francisco Bay, once home to Lockheed Martin’s missile design division, proved less welcoming during the Vietnam War. The development of pacifism went hand in hand with “defense bashing” and scathing criticism of the military-industrial complex. In 1970, for example, Stanford University, a major training center for the country’s engineers, banned military recruitment on its campus.

This trend is changing. Awareness of China’s technological rise among American elites has spread to the Bay Area. Fear has taken hold since Beijing introduced its “military civil fusion” strategy, which aims to fund dual use technologies that emerge in the civilian sphere. In response, in 2015 the Pentagon launched Defense Innovation Units, which provide seed funding for civilian innovation projects with military applications. These units have established an office in Mountain View. Venture capital spending on civilian start-ups developing defense projects doubled between 2019 and 2022 in the US (from $19 billion to $33 billion), and some projects raised record amounts of capital, such as the start-up Anduril, which is developing a drone interception system (which raised a round of $1.5 billion in December 2022), or Shield AI, which is developing an AI-based autonomous piloting system for drones (which raised a round of $90 million in June 2022). Shield AI benefited for instance from a US Air Force contract.Big Techs” are not spared by this phenomenon of defense rehabilitation. While in 2018, Google employees protested against their company’s participation in an auction for a $10 billion cloud contract for the Pentagon’s “JEDI” project, no opposition was voiced when the replacement project (dubbed “JWCC”) was awarded to Google, Amazon, Microsoft and Oracle.

Within the EU, investment in “DefenseTech” is lower. France launched a “Defense Innovation Agency” in 2017 and two public funds for venture capital investment in defense. Germany has also created an innovation agency on the Darpa model, focusing on cybersecurity. The approval of Spain’s “PERTE aeroespacial” involved the local Ministry of Defense and will include the development of dual-use technologies (e.g., space observation). However, the lack of an EU integrated defense weighs on its ability to create a critical mass of public investment, especially as the military public procurement of member states is still largely captured by large, less agile defense companies, to the detriment of start-ups. Added to this is the persistence of sovereign reflexes of non-collaboration in defense R&D, as seen in the difficulties encountered in organizing the “Future Combat Air System” (FCAS) project, which aims to design tomorrow’s fighter aircraft, involving France (Thales, Dassault), Germany (MTU) and Spain (Indra Sistemas). As for venture capital, the spread of ESG standards, much more respected by European investment funds, is preventing the emergence of defense start-ups in the EU.

In a more unstable world, where the frontier between civilian and defense innovation is more porous, can the EU afford to remain on the sidelines of this technological race, which is also taking place in the defense sector?

Se puede leer el artículo en español en Cinco Días

¿Qué te ha parecido el artículo?