Not everyone is buying Elon Musk’s vision for orbital data centers.
Masayoshi Son, founder and CEO of Softbank, argued at a recent shareholder meeting that building data centers in space won’t do much to reduce costs and will take a long time when “in the battle for artificial intelligence, the next few years will be much more important than what might happen a decade or so from now.”
On the latest episode of TechCrunch’s Equity podcast, Kirsten Korosec, Sean O’Kane, and I discussed Son’s remarks as part of a larger discussion that included OpenAI’s plans for custom brands, chipmaker Groq’s new $650 million funding, and more.
Kirsten noted that it’s “very ironic” that Son is playing the skeptic here, given SoftBank’s “long history of wild bets.”
Sean, meanwhile, said that when Musk talks about “building a constellation of satellites — satellites that also need to be replaced every few years — to create an ‘orbital data center,'” it just “guarantees a lot more work” for SpaceX.
Read on for a preview of our conversation, edited for length and clarity.
Sean O’Kane: Listen, neo-clouds are the new oil, and everyone who wants to make money is turning to a neo-cloud. I’m proud to announce that TechCrunch is now a new-cloud, give us all your money.
I mean, that’s the thing you do. There seem to be so many players that have compute limitations, so whoever can afford to lease that computer gets it, whether it’s Groq, a company half-spun by Nvidia, or Allbirds, which went bankrupt and emerged from it as a new neo-cloud provider instead of selling Fernholz’s new shoes. I would definitely recommend people to go read it.
Or if you’re SpaceX, where your idea was: I’m going to build an AI platform that has an addressable market the size of US GDP, but before we get there, we’re just going to rent out our computing. And we’ve seen that continue to happen with SpaceX, where they’re not as big as the deals they’ve done with Google or Anthropic, but they just signed another deal, [their] First post IPO deal, to rent compute to another smaller player. They continue on this path.
You know, I can see this being a business for Groq in the near future. The question with all of this is how durable it is in the long run.
Anthony Ha: If we’re talking about SpaceX and their AI business and data centers, we also have to talk about these comments that Masayoshi Son, the CEO of SoftBank, made recently, where he basically said: What is the point of data centers in space? That’s a question we asked on this show.
And it speaks, again, to that sense in the industry that they’re really, really limited in compute — they have to build as many data centers as possible, [and] there are all kinds of reasons why this proves challenging here on Earth, so maybe space is the answer. But I think Son makes some pretty fair points: All of this stuff that we’re talking about, even if it all works—and the cost is going to be very, very severe to make it work—that’s not happening for years and years and years, so it’s not a solution to any immediate problem as far as the current need for data centers.
Kirsten Korosec: I just want to point out that SoftBank has a long history of making crazy bets. I think it says something when Sean comes up and asks the question that a lot of people have asked.
I mean, there are a lot of VCs and founders [who] have been drawn to the idea of orbital data centers and it seems that suddenly everyone is on board. When just a few years ago, I think if someone had mentioned this, they would have been slapped around a bit. So I think it’s an important part of the process that someone with a fairly high profile asks that question. But this is very ironic to me he he is the one asking it, because if you look his fieldthey’ve thrown a lot of money at some pretty bold ideas.
Sean: WeWork! Listen, we’re going to be saying this a lot over the next couple of years. The idea of putting these things in space is going to be an interesting engineering challenge and certainly an interesting economic challenge.
Antony, what you said is certainly correct to an extent. Elon Musk is a person who hates bureaucracy, and you know, there are no NIMBYs in space, so of course he’s going to try to do it.
To me, it comes down to this: The business as it is now for SpaceX, especially the launch business, is very dependent on Starlink. The reason they have 80 or 90% of the traffic market worldwide is not only because they’ve done all these things better than almost any other launch provider around the world, it’s also because they have Starlink which increases that number. If you take Starlink out of the equation, it would be closer to — I don’t know, maybe 20% or 30% of the launch market, or 40%, but it certainly wouldn’t be 90%.
And when you’re talking about building a constellation of satellites — satellites that also need to be replaced every few years — to create an “orbital data center,” you’re just guaranteeing a lot more work for the launch business. And I just can’t stop myself from going back to this spot.
Kirsten: I want to say this very quickly [SpaceX’s] Other large businesses rent their computer, by the way. So back to the chip discussion. We have come full circle.
Anthony: One of the other themes this episode may run through is this idea talking about your own book. This is not a new phenomenon. Executives at tech companies or any other company, what they envision for the future is ultimately the future that will be beneficial to their business.
But I think it’s something that’s always worth remembering when we’re having these conversations about big AI companies, because it’s this time of incredible uncertainty, and we’re all wondering: What does the job market look like in the future? What effect will this have on the environment? What skills do I need to learn?
All these AI CEOs or investors, they all have thoughts on this. And it’s not that they’re wrong or that they’re deliberately misleading, but either way, there’s an asterisk to these predictions. In Musk’s case, he’s talking about something that would be very good for SpaceX’s business. In the case of SoftBank, they have invested heavily in data center projects here on Earth. Sam Altman is the other notable figure he rolled his eyes a little to the idea of the orbital data center — again, he and Elon Musk obviously have a long and complicated history together.
All this means is that there are no objective, unbiased observers here. All these people with baggage and huge sums of money are at stake.
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