6 blue sUAS manufacturers push American Security Drone Act in letter to Senate Committees

In a letter, dated June 22nd, 2022, to the U.S. Senate Committee on Homeland Security and Governmental Affairs, and the U.S. House Committee on Oversight and Reform, the Blue sUAS manufacturers urge lawmakers to “include the American Security Drone Act (ASDA) in the final conference report for the House-passed America COMPETES Act and Senate-passed USICA,” as it aims to achieve the same goal of “strengthening our economy and safeguarding our security while providing a level playing field for all.”

The Blue sUAS manufacturers say that passing the American Security Drone Act would solve a “critical national security issue” and stop “the expenditure of taxpayer dollars on Chinese-made drones that threaten national security, economic competitiveness, and human rights.”

Over the last few years, Chinese drone maker DJI has repeatedly refuted data security concerns and other allegations, most notably in an article debunking five common DJI myths. Brendan Schulman, former DJI Vice President of Policy and Legal Affairs, discussed it extensively in this podcast.

According to an industry insider who requested anonymity, the accusations against DJI are not new, but the letter marks the first time that the Blue sUAS manufacturers have openly put their names behind what had previously been a veiled whisper campaign, i.e. using data security concerns to eliminate the competition.

The letter is signed by the leaders of the Blue sUAS drone makers, i.e. Adam Bry, CEO of Skydio, Henri Seydoux, CEO of Parrot Drones, Errol Farr, President of Auterion Government Solutions, Inc., George Matus, CEO of Teal Drones, Tabb Firchau, President of Freefly Systems, and Maximilian Boosfeld, CEO
of Wingtra. Wingtra and Freefly are both recent additions to the Blue sUAS manufacturers list.

DJI dominates the drone market

The letter states that DJI and Autel Robotics control the vast majority of the drone market. DJI alone, it reads, “controls approximately 90% of the recreational market and at least 70% of the enterprise market.” DJI allegedly used predatory pricing to achieve its dominant market share.

The consumer and professional drone markets are rapidly evolving and highly competitive. This has resulted in off-the-shelf drones, like the DJI Mavic 3, DJI Mini 3 Pro, and Autel EVO II that are highly capable aircraft that can be used for recreational, commercial, and even military missions. DJI is and has been at the forefront of developing highly capable, affordable drones, that at times even canabilized its own product line.

DJI seems to be the only drone manufacturer that can consistently get all three success criteria right; the ability to produce highly capable drones, in large quantities, and at very competitive prices.

Other drone makers, even the Chinese manufacturer Autel Robotics, have a hard time keeping up with DJI. Some of them have started to look at selling to the government and military as a way to avoid competing head-on with DJI.

For instance, Parrot's CEO Henri Seydoux announced in 2020, that it would no longer make consumer drones and would focus instead exclusively on “professional drones that are more respectful of the protection of data”.

Parrot was one of the first drone companies that joined the Blue sUAS manufacturers list, a government-approved group of drone makers that offer 8 to 14 times more expensive and oftentimes less capable drones to the US Government.

Other drone makers, such as US-based Skydio offer unmanned aircraft with unrivaled obstacle-avoidance capabilities, at competitive prices as well, however, in the past, the company has failed to quickly fulfill orders for its most recent consumer drone model, the Skydio 2.

It is also important to point out that all the Blue sUAS drones, while assembled or manufactured in the U.S., still contain components that are made in China.

Blue sUAS letter urges lawmakers to enact the American Security Drone Act

You can read the entire text of the letter below:

Dear Conferees:

We respectfully request that you include the American Security Drone Act (ASDA) in the final conference report for the House-passed America COMPETES Act and Senate-passed USICA. Included in both the House and Senate bills with minor differences, the ASDA would address a critical national security issue–the expenditure of taxpayer dollars on Chinese-made drones that threaten national security, economic competitiveness, and human rights–in a narrowly tailored, thoughtful manner. Passed by the House and Senate in earlier vehicles, the ASDA has strong bipartisan support, and builds on language in the FY 2019 NDAA banning DOD's use of Chinese-made drones. More importantly, ASDA is entirely aligned with the purpose animating USICA and COMPETES: strengthening our economy and safeguarding our security while providing a level playing field for all.

The drone market arguably is unlike any other U.S. advanced technology sector: two companies based in China–DJI and Autel–control the vast majority of the market. By contrast, Huawei had only a small fraction of the U.S. 5G and smartphone markets at its peak. DJI alone controls approximately 90% of the recreational market and at least 70% of the enterprise market.1 That level of control did not happen by accident. In its “Made in China 2025 Plan,” the Chinese government describes its intent to lead the world in ten sectors that include robotics, aerospace, and AI; drones lay at the intersection of those and other sectors. As documented in a study by the Washington Post, the Chinese government heavily subsidizes Chinese drone companies in order to achieve its industrial policy goals.2 According to the Post, DJI tried to hide that fact, “obscur[ing] its Chinese government funding while claiming that Beijing had not invested in the firm.”3

State-subsidized drone companies dominated the market by taking aggressive, arguably anti-competitive steps to suppress U.S. competitors. In one example, DJI lowered prices by 70% in the face of competition from a U.S. company, ultimately pushing that company out of the hardware business.4 In the words of former Undersecretary of Defense for Acquisition and Sustainment, Ellen Lord, “We don't have much of a small UAS industrial base because DJI dumped so many low-price quadcopters on the markets.”5

The stakes are significant. Small camera drones (typically weighing less than 10 pounds) are the epitome of a dual-use product with equally important contributions to civilian and military applications. With respect to civilian use cases, small drones are widely used to inspect the sensitive, aging critical infrastructure on which our society depends–from bridges and roads, to power generation and nuclear facilities. With respect to military use cases, small drones protect and empower soldiers by giving them backpack-portable eyes in the sky. In 2019, a Presidential determination under Title III of the Defense Production Act concluded “that the domestic production capability for small unmanned aerial systems is essential to the national defense.”6

Drones made by companies subject to influence from the Chinese government present real risks. In May 2017, the U.S. Navy issued a memo entitled “Operation Risks with Regards to DJI Family of Products”7 and in August 2017, the U.S. Army issued a memo entitled “Discontinue Use of Dajiang Innovation (DJI) Corporation Unmanned Aircraft Systems.”8 In 2018, Undersecretary Lord remarked, bluntly, “We know that a lot of the information is sent back to China from those [DJI drones], so it is not something that we can use.”9

Private security firms have confirmed the risks. Two independent security firms found that DJI's Android app—used by millions—is “covertly collecting sensitive user data and can download and execute code of the developers' choice.”10 According to the New York Times, “even when the app appears to be closed, it awaits instructions from afar.”11 Cybersecurity researchers highlighted that DJI used obfuscation techniques similar to malware to hide the code embedded in DJI's software, tactics capable of deceiving operators and authorities.12

Ukraine's experience demonstrates these risks in action. According to Ukraine's Vice Prime Minister, “Russian forces are using DJI products in order to navigate their missile[s].”13 Reports confirm that Ukrainian soldiers and civilians have been killed flying DJI drones, falling victim to DJI's surveillance technology that provides Russian forces with the location of the drone and its operator.14 Ukraine has accused DJI and China of prioritizing that technology for Russian forces, and limiting its utility in the hands of Ukrainian forces.

In addition to national security risks, there are human rights concerns. In 2020, the Commerce Department placed DJI on the Entity List, alongside Huawei and ZTE, for taking steps to support the Chinese government's genocide of the Uyghur people in Xinjiang.15 In 2021, President Biden's Treasury Department added DJI to the Chinese Military-Industrial Complex Companies (NS-CMIC) List, as well as the U.S. investment ban list.16 Treasury noted that DJI, “actively support[s] the biometric surveillance and tracking of ethnic and religious minorities in China, particularly the predominantly Muslim Uyghur minority in Xinjiang.”17

ASDA addresses these threats in a targeted way. It protects taxpayer dollars and national security by directing federal agencies not to purchase insecure drones made by companies based in China, building on FY2019 NDAA language that does the same for the Department of Defense. ASDA takes a firm but flexible approach, prioritizing national security while providing significant exemptions and waivers to permit the purchase and use of Chinese-made drones where necessary to meet an important objective, such as Counter-UAS or undercover investigations. ASDA also addresses federal grants in a provision that does not come into effect until two years after enactment. That provision restricts the use of federal grants or contracts to buy insecure drones, but contains the same significant exemptions and waivers.

The ASDA takes a careful, narrow approach to protecting federal funds and federal networks. It will not directly impact the use of drones in the recreational, commercial, or public safety markets, despite claims made by DJI and its partners. After enactment of the ASDA, public safety agencies, private companies, and hobbyists can continue to buy and use their drone of choice, whatever it may be.18 The ASDA addresses the federal government and federal tax dollars.

The ASDA complements other government efforts to foster a more competitive, fair marketplace while dealing with threats to national security. Over the last two years, DOD's Defense Innovation Unit's Blue UAS Program has identified and vetted trusted U.S. and allied drone vendors for the military. The undersigned companies are proud participants in the Blue UAS program, which has successfully provided DOD with secure, highly capable drones in the wake of the FY2019 NDAA restrictions on DOD.

We urge the conferees to include and enact this measured, bipartisan bill. Omitting the ASDA in a bill designed to address geopolitical competition with China would represent a significant step back for America's global leadership in this space, and for a U.S. domestic industry forced to compete with foreign state-subsidized companies. Enacting the bill will send a strong signal that the U.S. is committed to providing a fair and even playing field, promoting secure dual-use technology, and protecting our national and economic security.

The letter is signed by:

• Adam Bry, CEO of Skydio, Inc.
• Errol Farr, President of Auterion Government Solutions, Inc.
• Tabb Firchau, President of Freefly Systems
• George Matus, CEO of Teal Drones
• Henri Seydoux, CEO of Parrot Drones, SAS
• Maximilian Boosfeld, CEO of Wingtra AG

Blue sUAS letter to promote the American Security Drone Act

Here's the original letter: