Impact of SpaceX rideshare on small sat launchers market

[GreenShrike]

Riddle me this: if Blue had injected their tortoise with some mutant hare DNA and had gotten New Glenn out in 2020 or so, and they were now offering Blue DeliveryVan-to-Orbit(tm) rideshare missions with a per-kilo price around the same as Transporter, would Beck now be complaining about "oligopolies"?

What about in a couple of years when Blue really *does* make a rideshare offering? New Glenn is so big, it'll likely be rare that a flight contains a single payload, and the success of SpaceX's Transporter and Bandwagon offerings is such that Blue will most probably want a slice of the pie -- and they may (well, here's hoping, anyway) have the service quality and pricing to effectively compete with SpaceX.


Outside of niche requirements, small sat launchers were always going to get squished. Their high cost per tonne has always meant that larger rockets with lower per-tonne costs were Swords of Damocles hanging over their corporate models, and really the only surprise is that, to date, only one blade is slicing up their business plans.

Whether RL thought that it wouldn't fall, or that if it did fall, they could dodge, they still chose to set up in its shadow -- and that's on them.


I truly hope for the best, but it's up to Rocket Lab (and Relativity, and Stoke, etc.) to plan for the worst.

[RedLineTrain]

Per M.E.T.'s interpretation of antitrust law, setting prices with the specific intent of undercutting competitors is not illegal, thus the lack of legal action against SpaceX does not prove anything regarding how SpaceX sets their prices.

If you are a monopoly, you have a different rulebook.  With Falcon 9, they are going to 95%+ mass share.  With Starship, they are going to 99%+ mass share.  Anybody who has a colorable suit, would make it.

But the activation energy required for kvetching to the New York Times is infinitely lower than even the negligible costs of a lawsuit.

[trimeta]

I suspect that SpaceX is ignoring the competition when they set their prices.

Even this milquetoast statement is slanderous to SpaceX.

We can be 100% certain that the competition is not a variable in how SpaceX sets its rideshare prices.  The first reason is logical.  The second and third are empirical.

(1) The competition's prices do not give any useful information to SpaceX.  Rather, factoring in those prices just enters noise into SpaceX's testing of the market.

(2) SpaceX hasn't been sued.  If there was any shred of potential SpaceX anti-competitive behavior, you can be sure that Rocket Lab and others would be in SpaceX's shorts legally.

(3) SpaceX's prices do not resemble the prices that others offer.

We have seen quite a few companies testing new markets without reference to competitors.  Perhaps the most famous is Ford's pricing on its Model T.

Per M.E.T.'s interpretation of antitrust law, setting prices with the specific intent of undercutting competitors is not illegal, thus the lack of legal action against SpaceX does not prove anything regarding how SpaceX sets their prices.

I think the point here is that SpaceX could achieve the same result by setting prices at 9/10ths the competition. If they are at 1/6th, one can infer they are not undercutting, they are in a different arena.

At 9/10th the price, other factors (in particular, dedicated launch vs. rideshare) may make the higher-priced option appealing for a wider range of customers. With just 1/6th the price, though, it's at the point where customers may choose to redesign their entire business model about being able to use the rideshare, it's just that much cheaper.

[trimeta]

Per M.E.T.'s interpretation of antitrust law, setting prices with the specific intent of undercutting competitors is not illegal, thus the lack of legal action against SpaceX does not prove anything regarding how SpaceX sets their prices.

If you are a monopoly, you have a different rulebook.  With Falcon 9, they are going to 95%+ mass share.  With Starship, they are going to 99%+ mass share.  Anybody who has a colorable suit, would make it.

But the activation energy required for kvetching to the New York Times is infinitely lower than even the negligible costs of a lawsuit.

It would be interesting to see actual legal precedent to support this claim. The article I linked earlier about dumping was actually mostly talking about foreign companies shipping low-priced goods that outcompete domestic industries (and the thresholds where it's acceptable to apply tariffs to combat this practice), and so perhaps it doesn't even apply to domestic companies trying to undercut other domestic companies. Especially in the US, there's been very little successful antitrust action taken in recent years: occasionally two companies aren't allowed to merge, but business practices have been mostly untouched. It would be fairly quixotic of Rocket Lab to think that they're going to be the ones to turn that around. They seem to think their odds are better at getting favorable attention from lawmakers than from the courts.

[JayWee]

Per M.E.T.'s interpretation of antitrust law, setting prices with the specific intent of undercutting competitors is not illegal, thus the lack of legal action against SpaceX does not prove anything regarding how SpaceX sets their prices.

What is frowned upon is selling at a dumping price, that is - selling below production cost.

Do we have some estimates of Transporter payload masses? So we can estimate whether or not SX makes any money on them.

[trimeta]

Per M.E.T.'s interpretation of antitrust law, setting prices with the specific intent of undercutting competitors is not illegal, thus the lack of legal action against SpaceX does not prove anything regarding how SpaceX sets their prices.

What is frowned upon is selling at a dumping price, that is - selling below production cost.

Do we have some estimates of Transporter payload masses?

I'm working under the assumption that they're making some minimal amount of profit on Transporter launches: that they aren't literally selling for under their internal costs. Knowing the exact amount of profit would be helpful for these discussions, but for considerations regarding dumping, I'm more interested in what the legal status is if they are making a profit.

[GreenShrike]

Per M.E.T.'s interpretation of antitrust law, setting prices with the specific intent of undercutting competitors is not illegal, thus the lack of legal action against SpaceX does not prove anything regarding how SpaceX sets their prices.

I think the point here is that SpaceX could achieve the same result by setting prices at 9/10ths the competition. If they are at 1/6th, one can infer they are not undercutting, they are in a different arena.

But what about all the prospective space services providers whose business cases close at Transporter pricing but fail at 5 times that cost? How many space services startups are we willing to strangle at birth just to keep small sat launchers viable?

Where does the greater good lay?

Remember that transport by itself is worthless. To be valuable, transport requires cargo that will generate profit at the destination. Lower transportation costs broadens the range of cargos that will be able to generate a profit, and thus should be celebrated.

Electron may be a fine stagecoach, but bring on the era of the orbital railway already.

[bstrong]

I'm working under the assumption that they're making some minimal amount of profit on Transporter launches: that they aren't literally selling for under their internal costs. Knowing the exact amount of profit would be helpful for these discussions, but for considerations regarding dumping, I'm more interested in what the legal status is if the are making a profit.

This page on the FTC website is a good read: https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/single-firm-conduct/predatory-or-below-cost-pricing

My understanding of it is that you need to be be both pricing below cost and doing it with the intent to raise prices in the future after you've driven your competitors out of business. Even if SpaceX is losing money on transporter flights, it's fine if they are planning to keep prices low (or decrease them further) in the future. Basically, it seems like MET is correct about the legality.

IMO, what Beck and Ellis are doing is publicly lobbying for government launch programs to buy some dedicated smallsat launches in the spirit of helping them stay in business long enough to effectively compete with SpaceX in the future. Personally, I'm in favor of it. I'm a fan of SpaceX, but I want to have lots of successful launch companies, and without government support, I don't see a path to it.

I'm also in favor of allowing all the new space startups enabled by Transporter missions to keep right on buying the lowest cost product on the market, if they so desire. That's great for the ecosystem.

[trimeta]

Per M.E.T.'s interpretation of antitrust law, setting prices with the specific intent of undercutting competitors is not illegal, thus the lack of legal action against SpaceX does not prove anything regarding how SpaceX sets their prices.

I think the point here is that SpaceX could achieve the same result by setting prices at 9/10ths the competition. If they are at 1/6th, one can infer they are not undercutting, they are in a different arena.

But what about all the prospective space services providers whose business cases close at Transporter pricing but fail at 5 times that cost? How many space services startups are we willing to strangle at birth just to keep small sat launchers viable?

Where does the greater good lay?

Remember that transport by itself is worthless. To be valuable, transport requires cargo that will generate profit at the destination. Lower transportation costs broadens the range of cargos that will be able to generate a profit, and thus should be celebrated.

Electron may be a fine stagecoach, but bring on the era of the orbital railway already.

This is why there are really two separate questions here:

1. Is SpaceX setting prices with the intent of significantly undercutting other providers, with the explicit goal of driving those companies out of business and securing a monopoly on commercial launch?
2. If so, is there anything wrong with that?

There are legal and "greater good" arguments that regardless of how you'd answer the first question, the second one should be answered "no."

[meekGee]

Riddle me this:
...

Outside of niche requirements, small sat launchers were always going to get squished. Their high cost per tonne has always meant that larger rockets with lower per-tonne costs were Swords of Damocles hanging over their corporate models,
...

That.
It never made sense.

[DeimosDream]

Per M.E.T.'s interpretation of antitrust law, setting prices with the specific intent of undercutting competitors is not illegal, thus the lack of legal action against SpaceX does not prove anything regarding how SpaceX sets their prices.

What is frowned upon is selling at a dumping price, that is - selling below production cost.

Do we have some estimates of Transporter payload masses? So we can estimate whether or not SX makes any money on them.

Or we can count by port and ignore mass.
Standard transporter mission appears to be:
1x cake topper (500kg minimum)
4x payload adapter levels each with 1.2ton minimum booking (ranging from 4x 300kg+ XL payloads to 24x 50kg+ payloads).

That adds up to $31.8M minimum to fully book Transporter, plus extra for anyone who uses more than the included mass allowance per port or who pays for SpaceX provided payload separation systems, services, etc.

I suspect SpaceX is pricing the base rate close to at-cost, with SpaceX then making a profit by selling extra mass, insurance, separation systems, etc. I doubt the company trying to finance Mars by any/all means is actually loosing money.

[thespacecow]

There's no indication that killing other launch companies is a primary concern of SpaceX. If it is they wouldn't have a multi-year backlog for Transporter. Increasing Transporter cadence would allow them to grab more payloads from smallsat launch companies, yet SpaceX is not doing it.

They're also increasing the price of Transporter rideshares, which shows they do care about profit margin on these missions.

Also if they really want to get more smallsat payloads, they'd restart Starlink rideshares, which would allow more inclination choices, but they're not doing it either, presumably because they care more about profit from Starlink than taking payloads away from smallsat launch companies.

BTW, it would be pretty stupid for government to spend more money on launch (they're already spending billions per year on non-SpaceX launch to start with), given launch problem is pretty much already solved, and with Blue/ULA there's also sufficient competition. The launch market is pretty small, it can't support many providers to start with, there's already a general consensus that too much private capital went into launch which is creating an excess of launch companies, the last thing we need is government putting additional money into this.

[deltaV]

IMO, what Beck and Ellis are doing is publicly lobbying for government launch programs to buy some dedicated smallsat launches in the spirit of helping them stay in business long enough to effectively compete with SpaceX in the future. Personally, I'm in favor of it. I'm a fan of SpaceX, but I want to have lots of successful launch companies, and without government support, I don't see a path to it.

1. Within a few years there will be many US medium and heavy vehicles in service including Falcon, Starship, Vulcan, New Glenn, Terran R, MLV, Neutron, and Nova. Furthermore the NSSL program is structured to ensure that at least 2-3 US companies will have successful heavy launch vehicles. So there's already government support for a competitive launch market.

2. The competitive medium and heavy markets will ensure that small payloads have multiple US options for ride share or dedicated launch, even if all 3+ US small launchers currently existing or under development (e.g. Electron, RS 1, Alpha) are discontinued. Commercial small payloads can also get small launchers from several US ally countries (e.g. Europe, Australia, India, Japan, South Korea). So there's no reason for the government to interfere with the invisible hand deciding if small launchers are worth it.

3. If I owned a small-launcher company one of the things that would keep me awake at night would be Stoke Space's Nova. With Nova's full re-usability and much smaller size than Starship it could easily be cheaper to get a dedicated launch on Nova than on any small launcher.

[FutureSpaceTourist]

To me the most insidious claim about SpaceX in the NYT article is not directly about rideshare:

Mr. Ellis of Relativity Space said SpaceX had made explicit and repeated efforts to limit the growth of his business.
“Every single funding round that was done once we started to become a larger company, and every single customer deal we have signed, has been followed with a swift and large number of outreach calls from SpaceX to all of those entities berating them for doing things with us,” he said. “This is not theoretical.”

Asking customers for the opportunity to bid for their launches is one thing, attacking their choices (if true) is another. As for funding, we know SpaceX has no issue getting the funds it needs. Clearly what funders do with their money is their business.

I have no issue with what SpaceX are doing with rideshare, taking at face value that they are making money on the launches. But I do have an issue if it’s part of a wider deliberate strategy of undermining small sat launch competitors.

[deltaV]

To me the most insidious claim about SpaceX in the NYT article is not directly about rideshare:

Mr. Ellis of Relativity Space said SpaceX had made explicit and repeated efforts to limit the growth of his business.
“Every single funding round that was done once we started to become a larger company, and every single customer deal we have signed, has been followed with a swift and large number of outreach calls from SpaceX to all of those entities berating them for doing things with us,” he said. “This is not theoretical.”

Berating people is probably not in SpaceX's best interests even if its interests are self-centered. SpaceX should remind its people not to do this sort of thing.

[woods170]

Riddle me this:
...

Outside of niche requirements, small sat launchers were always going to get squished. Their high cost per tonne has always meant that larger rockets with lower per-tonne costs were Swords of Damocles hanging over their corporate models,
...

That.
It never made sense.

Which is exactly why SpaceX pivoted away from Falcon 1 as soon as they could. Back in 2005 Musk et al already understood that small launchers have no future because they don't really help in reducing the cost of access to space.

[M.E.T.]

To me the most insidious claim about SpaceX in the NYT article is not directly about rideshare:

Mr. Ellis of Relativity Space said SpaceX had made explicit and repeated efforts to limit the growth of his business.
“Every single funding round that was done once we started to become a larger company, and every single customer deal we have signed, has been followed with a swift and large number of outreach calls from SpaceX to all of those entities berating them for doing things with us,” he said. “This is not theoretical.”

Asking customers for the opportunity to bid for their launches is one thing, attacking their choices (if true) is another. As for funding, we know SpaceX has no issue getting the funds it needs. Clearly what funders do with their money is their business.

I have no issue with what SpaceX are doing with rideshare, taking at face value that they are making money on the launches. But I do have an issue if it’s part of a wider deliberate strategy of undermining small sat launch competitors.

Seems like after the Astra and Virgin orbit fiascos funding is rightly becoming tighter for the Space Spacs and now the blame game is starting.

The easy money is gone forever and you have to fight for every cent - especially if your medium-heavy rocket is still some years away from reaching orbit.

[M.E.T.]

To me the most insidious claim about SpaceX in the NYT article is not directly about rideshare:

Mr. Ellis of Relativity Space said SpaceX had made explicit and repeated efforts to limit the growth of his business.
“Every single funding round that was done once we started to become a larger company, and every single customer deal we have signed, has been followed with a swift and large number of outreach calls from SpaceX to all of those entities berating them for doing things with us,” he said. “This is not theoretical.”

Berating people is probably not in SpaceX's best interests even if its interests are self-centered. SpaceX should remind its people not to do this sort of thing.

Telling people they are throwing their money down the toilet by investing in obsolete rockets when Starship’s arrival is imminent is not berating them - it is trying to save them from making a terrible mistake.

[chopsticks]

To me the most insidious claim about SpaceX in the NYT article is not directly about rideshare:

Mr. Ellis of Relativity Space said SpaceX had made explicit and repeated efforts to limit the growth of his business.
“Every single funding round that was done once we started to become a larger company, and every single customer deal we have signed, has been followed with a swift and large number of outreach calls from SpaceX to all of those entities berating them for doing things with us,” he said. “This is not theoretical.”

Berating people is probably not in SpaceX's best interests even if its interests are self-centered. SpaceX should remind its people not to do this sort of thing.

Telling people they are throwing their money down the toilet by investing in obsolete rockets when Starship’s arrival is imminent is not berating them - it is trying to save them from making a terrible mistake.

Obsolete rockets. Lol.

[DanClemmensen]

To me the most insidious claim about SpaceX in the NYT article is not directly about rideshare:

Mr. Ellis of Relativity Space said SpaceX had made explicit and repeated efforts to limit the growth of his business.
“Every single funding round that was done once we started to become a larger company, and every single customer deal we have signed, has been followed with a swift and large number of outreach calls from SpaceX to all of those entities berating them for doing things with us,” he said. “This is not theoretical.”

Berating people is probably not in SpaceX's best interests even if its interests are self-centered. SpaceX should remind its people not to do this sort of thing.

Calls from a company to the potential customers of a competitor are a normal part of the sales and marketing process in any industry, and especially when the individual sale is in the hundreds of thousands or millions of dollars. The number of potential customers is very small in absolute terms so any indication that a customer might be actively making a vendor selection will result in salivating salespeople in a feeding frenzy. Yet again: I see no evidence of deliberate intent to harm the baby launch companies. it's a side effect.

Calls to a potential funding source are a different issue. We have nothing here except hearsay, but I speculate that these calls may be from folks in the capital market (investors, VCs, etc.) that might benefit from a lower valuation, and not from SpaceX at all. There may be deliberate malice, but we have no actual evidence.