SpaceX and xAI: How The Muskonomy Is Privatising the Militarisation of Space
States have viewed the militarisation of space as a security issue since the 1950s. During the Cold War, the Soviet Union and the United States spent significant portions of their GDP on military technology. The push to launch objects into orbit drove space research and started the Space Race. Just as warfare has shifted from traditional battles to cyber and quantum threats, space security is now facing a similar shift toward cyber challenges.
On February 2, 2026, Bloomberg reported that SpaceX had officially acquired xAI. This merger is historic, not just because it is the largest ever—six to seven times larger than any previous deal—but also because of its geopolitical and regulatory impact. The deal values SpaceX at $1 trillion and xAI at $250 billion. This means the world's top launch system, internet backbone, and a leading AI model are now under one company. This concentration of power raises major antitrust and security concerns. Critics warn that no single person, such as Elon Musk, should control such key infrastructure for the digital and physical economies of the 21st century. Some even say this creates a company that is "too big to fail" for U.S. national security.
Another major issue is the geopolitical impact. This merger could lead to the privatisation of key 21st-century infrastructure, including national security services, on a scale never seen before. For example, SpaceX has asked the Federal Communications Commission for permission to launch up to 1 million satellites as part of its "orbital data centre." These satellites could eventually host quantum computers, which could serve both defensive and offensive purposes for the U.S. military in cyber warfare.
Project Maven, a U.S. Department of Defence program, was created to speed up the use of machine learning and data integration in military intelligence. It has now become a full AI warfare system. In September last year, the director of the National Geospatial-Intelligence Agency said that by June 2026, Maven will start sending "100 per cent machine-generated" intelligence to commanders. This marks a big change: in just four months, AI will move from assisting to fully generating intelligence. With this technology, the merger lets SpaceX use its satellites (via Starlink and Starshield) to collect data, while xAI's Grok system processes it. The Pentagon has hired xAI to bring its AI into defence programs, positioning Grok as a primary intelligence analysis tool.
Military developments seem to include AI more and more. The proposed U.S. 'Golden Dome' (a project under development to build a missile defence system comparable to Israel's 'Iron Dome') would use AI systems for defence purposes. However, SpaceX is reportedly proposing to own and operate its contribution to the Golden Dome as a subscription service for the Pentagon. Instead of the government owning the satellites, the Pentagon would pay SpaceX for access to them. This fundamentally alters defence procurement from asset ownership to "Defence-as-a-Service”, turning the most innovative aspects of national defence into a completely externally contracted service. This is a historic level of defence privatisation. The U.S. government would contract with xAI for real-time processing of threat data, autonomous decision-making through automated command and control via a cross-domain artificial intelligence-enabled network, and data integration from space-based sensors and other tracking systems to enable instantaneous targeting decisions.
The U.S. leads the world in space militarisation, with 247 military or dual-use satellites, compared to China's 157. This merger is likely to shape not only the future of space militarisation but also the evolution of warfare and of space as a battlefield, thanks to the integration of new technologies, infrastructure, and weapons. As the U.S. pushes ahead with autonomous military technology, other major powers like China and Russia may accelerate their defence technology efforts, possibly leading to an AI-driven arms race.
Will the U.S. government, the largest military in the world, become dependent on a single company network for space militarisation? So much so that regulation becomes a logistical nightmare? The military industrial complex is officially dominating space. Not only through traditional defence contractors, but the SpaceX/xAI merger is the ultimate privatisation and consolidation of the U.S.'s space-based defence infrastructure under a single corporate entity - a historically unprecedented concentration of military power outside of a state. What this means for the future militarisation of space by states seems to be to put your faith in the firm, or else you can’t compete. Not seriously, anyway.
References
Atomic Heritage Foundation. "Militarisation of Space." https://www.atomicheritage.org/history/militarisation-space.
Bloomberg. "SpaceX Acquires xAI as Musk Prepares for Mega IPO." February 3, 2026. https://www.bloomberg.com/news/articles/2026-02-02/elon-musk-s-spacex-said-to-combine-with-xai-ahead-of-mega-ipo.
CNBC. "Elon Musk's SpaceX Acquiring AI Startup xAI Ahead of Potential IPO." February 2, 2026. https://www.cnbc.com/2026/02/02/elon-musk-spacex-xai-ipo.html.
CNBC. "Musk's xAI, SpaceX Combo Is the Biggest Merger of All Time, Valued at $1.25 Trillion." February 3, 2026. https://www.cnbc.com/2026/02/03/musk-xai-spacex-biggest-merger-ever.html.
Geopolitical Monitor. https://www.geopoliticalmonitor.com/.
Maven. "AI Agents & Agentic Workflows: Your 2026 Roadmap”. https://maven.com/p/453e73/ai-agents-agentic-workflows-your-2026-roadmap.
McKinsey & Company. "Multinationals at a Crossroads: Adapting to a New Geopolitical Era." https://www.mckinsey.com/capabilities/geopolitics/our-insights/multinationals-at-a-crossroads-adapting-to-a-new-geopolitical-era.
U.S. News & World Report. "New and Upcoming IPOs in 2026." https://money.usnews.com/investing/articles/new-and-upcoming-ipos-in-2026.
World Economic Forum. "What Role Do Companies Play in a More Fragmented World?" September 2025. https://www.weforum.org/stories/2025/09/what-role-do-companies-play-in-a-more-fragmented-world/.