The Wall Street Journal reported that some U.S. officials believe Elon Musk acted unilaterally to slow Starlink service in Ukraine, a claim that complicates the narrative that President Donald Trump ordered the move. The incident has prompted business leaders to reassess the reliability of contracts with Musk's companies.
The dispute over who authorized the service reduction has created confusion between the White House and Musk. Musk posted on X that speed and usage limits are determined by the U.S. military and ultimately the president. In contrast, President Trump told reporters he did not know who was responsible for the slowdown. The Wall Street Journal's report, citing anonymous sources, stated that some officials say Musk acted on his own and that Trump did not specifically order retribution against Ukraine.
This episode highlights the structural risks inherent in doing business with Musk. Jeffrey Sonnenfeld, Senior Associate Dean for Leadership Studies at the Yale School of Management, argues that Musk's business interests are closely aligned with the White House because his companies rely heavily on federal support. Approximately one-fifth of SpaceX's total revenues come directly from U.S. federal agencies, including NASA and the Department of Defense. Additionally, SpaceX satellites depend on federal regulatory approvals.
Defense contractors generally have their foreign sales influenced by the White House and Congress. For example, Patriot missile sales are driven by White House decisions rather than by manufacturer Raytheon, while THAAD missile and F-35 fighter sales are determined by White House and Congressional decisions rather than by Lockheed Martin. With reports that Musk is considering merging Tesla and SpaceX into a single entity, he would require federal regulatory approval for such a merger.
Business partners are now factoring this uncertainty into their risk management strategies. United Airlines, which has a partnership with Starlink for in-flight Wi-Fi, must consider the possibility that service could be throttled if it draws Musk's ire. This follows a recent public scolding by Musk of Delta Air Lines' CEO over Delta's decision not to partner with Starlink.
The situation may benefit competitors like Blue Origin, which recently raised $10 billion in a fundraising round that valued the company at $130 billion. Sonnenfeld notes that markets dislike unreliable monopolies. Competitors do not need to surpass SpaceX in technology to gain market share; they only need to offer the certainty that Musk may no longer provide. As customers ranging from foreign governments to businesses seek to diversify supply chain risks away from Starlink, SpaceX may face a shift in customer loyalty.