The top small drone manufacturer in the world is hitting back at the Pentagon’s assertion that the company’s unmanned aerial systems send user data to China, as Defense Department officials use the claim as part of their case for establishing an alternative U.S. supply of small UAS.
The Pentagon is launching its Trusted Capital Marketplace program this fall and plans to initially focus on the small UAS sector. The marketplace program is meant to connect promising American technology start-ups with “trusted” venture capitalists, rather than risk those firms taking money from sources such as Chinese investors, according to U.S. officials. The program is among many recent DOD initiatives aimed at blocking China.
During an Aug. 26 press briefing at the Pentagon, DOD acquisition chief Ellen Lord discussed the new program’s initial emphasis on small UAS and singled out DJI Technology, the leading quadcopter manufacturer in the world. DJI is based in Shenzhen, China.
“So essentially, we don't have much of a small UAS industrial base because DJI dumped so many low-price quadcopters on the markets,” Lord said. “And we then became dependent on them, both from the defense point of view and the commercial point of view, and we know that a lot of the information is sent back to China from those. So it’s not something that we can use.”
However, Michael Oldenburg, a DJI spokesman, called Lord’s comments “false and misleading.”
“DJI drones do not automatically send data to the Chinese government or to any unauthorized party,” Oldenburg said. He pointed to a February 2018 study of DJI’s data practices conducted by Kivu Consulting, an independent cybersecurity auditor, that concluded “users have control over the types of data DJI drones collect, store, and transmit."
Oldenburg also disputed Lord’s characterization that DJI “dumped” cheap quadcopters on the U.S. market.
“DJI has earned its market-leading position in the drone industry because we have continued to research, develop and deliver the most capable products to the market,” he said.
DOD has not responded to requests for additional information on its claims about DJI.
In 2018, DOD banned the purchase of commercial off-the-shelf small UAS in a move widely perceived as aimed at DJI. However, Lord has said she and DOD Chief Information Officer Dana Deasy have spent “a lot of quality time together” reviewing waiver applications from DOD organizations seeking to buy DJI drones.
"The demand signal is very, very strong, especially for expeditionary units, special operations and so forth," Lord said last week during a conference in Washington hosted by the Association of Unmanned Vehicle Systems International.
The Senate’s version of the fiscal year 2020 defense authorization bill would codify the ban by prohibiting the Pentagon from buying any small UAS from Chinese-based companies, while still maintaining a waiver process. The provision was pushed by Sen. Chris Murphy (D-CT), who cited a national security “threat” posed by DJI.
“Congress needs to ban the use of all Chinese-made drones by Department of Defense and instead only spend taxpayer money on U.S. drone manufacturers and foster the development of a U.S.-based supply chain,” Murphy said in May.
DJI has not formally come out against the language, although Oldenburg said the company believes in establishing “standards” for small UAS, rather than a ban aimed at Chinese companies.
“This just blanket country-of-origin ban doesn't make any sense,” he told Inside Defense Aug. 27. “What we think makes more sense is a set of clear and transparent standards for the industry, and specifically for the [small] UAS or the drone industry around key areas such as features, performance, safety, security.”
DJI maintains that users of its drones retain full control over how their data is or is not shared with the company. If U.S. users do elect to share data, it’s stored in Amazon Web Services cloud servers based in the United States, according to Oldenburg. He said the company would not be able to comply with a request from the Chinese government for access to user data stored in the United States.
“We are headquartered in Shenzhen, but we view ourselves as a global company,” Oldenburg said. “So we abide by the local laws and regulations just as any other multinational technology company would do.”
He also said DJI has not had any engagement with DOD regarding the department’s cybersecurity qualms.
Since the company doesn’t sell directly to its commercial customers, it doesn’t always know when U.S. military organizations are buying its drones, according to Oldenburg. But despite the 2018 ban, he said DJI is aware of recent orders from U.S. military entities, including a Jane’s 360 report from July previewing Air Force plans to buy a variety of the company’s UAS models.
Meanwhile, the Pentagon’s plan to boost the U.S. small UAS market through its Trusted Capital Marketplace program was bolstered in June, when President Trump issued a Presidential Determination declaring the domestic production capability for small UAS as “essential to the national defense.”
Under the Defense Production Act, the determination allows DOD to spend up to $50 million per year through economic incentives for small UAS suppliers, such as "purchases to create or expand production capacity or assistance with the purchase and installation of production equipment," according to a DOD spokesman.
At the AUVSI conference last week, Lord said the Pentagon’s goal is to boost U.S. companies to the point where they are viable in the commercial UAS marketplace.
“We think competition makes the market better for everyone,” Oldenburg said when asked about DOD’s efforts to shore up DJI’s U.S.-based competitors. “It gives consumers choice. And we think it raises the tide for everyone, whether that's product functionality, product safety or product security.”