Jeff Bezos Challenges Elon Musk with an $80 Billion Satellite Purchase

In many commercial-themed movies and TV shows, you can always see such a setting: no matter how successful the protagonist is, there will always be their "arch - enemy". This arch - enemy is comparable to the protagonist in terms of appearance, knowledge, wealth, and status, and even outshines the protagonist from time to time. A large number of dramatic conflicts thus unfold. Some people decide to take a desperate gamble to prove themselves against their "arch - enemy", while others secretly scheme to make their "arch - enemy" look bad.

In the eyes of many, there is a great deal of artistic exaggeration in this. After all, once a person's status rises, shouldn't their vision also expand? Just as many people find the fantasy - Xianxia dramas absurd because in people's simple perception, if a person is preoccupied with love and desire, they have no chance of attaining immortality. If a person is so petty - minded that they insist on going head - to - head with a specific person, they probably won't achieve much success.

But often, reality is just as if it were scripted. For example, Jeff Bezos and Elon Musk are such a pair of rivals.

Over the years, the business scopes of Bezos and Musk have increasingly overlapped, and it has even developed to the point where "whatever he does, I'll do the same". For instance, Musk entered the new - energy vehicle industry and founded Tesla. Bezos also started building cars, investing in Slate Auto, Rivian, and Zoox successively. Musk ventured into commercial spaceflight and founded SpaceX. Bezos also entered the commercial spaceflight field and founded Blue Origin. Musk delved into artificial intelligence and founded xAI. Bezos also wants to do artificial intelligence and launched the "Project Prometheus".

Bezos and Musk are even willing to publicly acknowledge their "competitive relationship". The most classic scene was on the day when Bezos announced the launch of "Project Prometheus", Musk directly made a bold move, reposting and commenting on his social media, "Haha, no way (laughing and crying), plagiarism (cat face)". Truly, they are like "a pair of smiling tigers and two horned sharks".

Recently, it's Bezos' turn to make a bold move. According to multiple media reports, at the critical juncture when SpaceX is about to complete the largest - scale IPO in history, Amazon decided to acquire the commercial satellite company Globalstar for $11.57 billion (equivalent to nearly 80 billion RMB). After the acquisition is completed, Globalstar and its satellite network will be incorporated into Amazon's commercial space project, Amazon Leo, directly competing with Musk's Starlink.

The First - Generation Unicorn in Commercial Spaceflight

If you've been following commercial spaceflight, you should know that SpaceX is not the first private company to attempt satellite networking and establish a communication network. For a long time before its birth, countless companies had tried this. The most well - known among them was Motorola's "Iridium Project". The concept of the Iridium Project first emerged in 1987, aiming to launch 66 low - orbit satellites to achieve global seamless mobile communication, and it was put into operation in 1998.

The Globalstar being acquired by Amazon this time is also such an "elder" in the industry.

Globalstar was founded in 1991. Its initial positioning was to build a satellite communication network and provide satellite communication services, directly competing with Motorola's Iridium Project. And like Starlink and the Iridium Project, in its early days, Globalstar was not a company but a project name. There were two initiators: one was Loral Space & Communications - as the name suggests, this company's main business is the manufacturing of communication satellites and the operation of in - orbit satellites; the other was the semiconductor giant Qualcomm.

However, compared with the cash - rich Motorola at that time, neither Qualcomm nor Loral had the sufficient strength to incubate the project alone. More importantly, Motorola's terminal products were communication tools, which directly had application scenarios and a shorter business path. Therefore, in 1994, Globalstar began corporate operation and introduced eight investors, including telecom giant Vodafone, aerospace equipment manufacturer DASA under the Mercedes - Benz Group, South Korean industrial giant Hyundai, French telecom giant Alcatel, and American telecom operator AirTouch. It then had the complete capabilities of "satellite manufacturing and satellite operation" and successfully went public on the Nasdaq in 1995.

Of course, Globalstar didn't miss any of the pitfalls that Motorola had encountered. In 1998, the first batch of Globalstar's communication satellites were launched one after another. But at that time, rockets were far from being as reliable as they are today, and their performance was extremely unstable. Soon after the project started, a Globalstar rocket exploded, destroying 12 satellites at once. Suffering heavy losses, Globalstar had to postpone its official operation until the end of 1999.

What Globalstar didn't expect was that the timing at the end of 1999 was even worse. In this year, due to a serious shortage of users and commercial returns far below expectations, the Iridium Project, which had just been put into operation in 1998, immediately filed for bankruptcy. People generally believe that the direct cause of the Iridium's bankruptcy was unclear product positioning. Ordinary people didn't need "seamless communication", and the cost of satellite communication was too high. In contrast, the already - popular Cellular Network Service at that time was more suitable for ordinary consumers.

In such an atmosphere, the negative sentiment towards the entire "satellite communication" industry became the mainstream, and Globalstar, which was competing with the Iridium Project, became the target of criticism. At that time, analysts said bluntly: "The bankruptcy of the Iridium Project is definitely a disaster for Globalstar... I'll give them at most a quarter to prove themselves."

Globalstar really didn't make it through. In 2000 when the Internet was taking off, who would use this communication service provider that few people used and charged $1.79 per minute? After reaching a peak of $50 during the Internet bubble in 2000, Globalstar's stock price kept falling without looking back, dropping to less than $1. In June 2001, Globalstar was delisted from the Nasdaq. In February 2002, Globalstar filed for bankruptcy protection. According to the submitted documents, at that time, Globalstar had only more than 60,000 users, with a cash reserve of $46 million, while its debt was as high as $3.4 billion.

So the Globalstar we see today is actually the restructured version 2.0. Compared with version 1.0, version 2.0 of Globalstar has a more practical business approach, repositioning itself as "a provider of high - quality commercial and consumer - grade mobile satellite voice and data services". At the same time, they also began to realistically look for commercial application scenarios through strategic investment or incubation. For example, they invested in a traffic monitoring technology provider, TrafficCast International. The restructured Globalstar went public again in 2006 and has remained listed ever since.

As of now, Globalstar has a total of 24 in - orbit satellites. Currently, their most competitive business is their cooperation with Apple: In 2022, Globalstar first cooperated with Apple and became the provider of its emergency communication service. In 2024, Apple made a strategic investment of $1.5 billion in Globalstar, acquiring a 20% stake. According to relevant documents, this fund will be mainly used for the two companies to jointly develop "new satellite constellations, ground infrastructure, and attempt to obtain more global mobile satellite service licenses".

Calculated based on the $1.5 billion for a 20% stake back then, in just two years, Globalstar's market value has risen from $7.5 billion to $11.57 billion, and Apple has made a 50% profit.

(The ideal scenario demonstrated by Globalstar: breaking down in a remote area)

Is It Just About Buying Satellites?

In terms of quantity, even after acquiring Globalstar, Amazon Leo will still find it difficult to compete with Starlink. As of now, Amazon Leo only has more than 200 in - orbit satellites, and its satellite Internet service is expected to be officially launched by the end of 2026. In contrast, Starlink currently has about 9,500 in - orbit satellites and has more than 9 million customers globally. Even if Globalstar plans to launch 48 new satellites in the future, their addition is unlikely to change the huge gap between the two sides.

So what exactly does Amazon see in Globalstar?

To answer this question, we first need to start with Starlink. The reason why Starlink has an absolute dominant position in the satellite communication field is not only due to SpaceX's unparalleled rocket - carrying capacity. The increasing number of users and more and more cooperation projects also jointly contribute to Starlink's structural advantages, making it a top - notch player in terms of operational capabilities. Therefore, if a company wants to compete with Starlink, the time and R & D costs it needs to invest are virtually limitless.

Under this premise, instead of going head - to - head, it's better to find an alternative path, and Globalstar is that path. Besides the dozens of in - orbit satellites, Globalstar's most core asset is the L - band and S - band frequency licenses across the globe.

Friends who have watched the movie "The Eternals" may remember that in the movie, the Celestials who created humans had a rule: they could not directly interfere with human affairs. However, they could choose to help humans indirectly through certain means. Similarly, for Amazon, instead of directly competing with Starlink in a head - on confrontation, it can use Globalstar's unique resources to gradually expand its influence in the satellite communication field. This is a more strategic and far - sighted approach.

From a broader perspective, the acquisition of Globalstar by Amazon also reflects the intensifying competition in the commercial spaceflight industry. As more and more companies enter this field, the competition for resources, technology, and market share will become increasingly fierce. In this context, finding unique competitive advantages and strategic paths will be crucial for companies to gain a foothold and develop in the long - term.

In conclusion, Amazon's acquisition of Globalstar is not just a simple satellite purchase. It is a strategic move that combines long - term development considerations and competitive advantages. Through this acquisition, Amazon hopes to enhance its competitiveness in the satellite communication field and gradually narrow the gap with Starlink.