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The Pentagon is spending billions on Big Tech and Silicon Valley startups as it goes all-in on AI

Apr 21, 2024 - qz.com
A new report from Brown University’s “Costs of War” project highlights the growing relationship between the Pentagon, U.S. intelligence communities, and major tech firms, with contracts worth up to $53 billion awarded between 2019 and 2022. The report suggests the U.S. military and intelligence agencies are increasingly relying on these tech firms for AI-enabled military technologies and cloud computing services. The Pentagon and the CIA are now frequently awarding multi-year contracts to these firms, with one notable example being the National Security Administration’s $10 billion, five-year contract with Amazon in 2021.

The report also indicates that a significant amount of military funding is being directed towards startups, such as Palantir, which has had contracts with various U.S. military and intelligence agencies and derives over half of its revenue from the U.S. government. Other defense tech contractors include Anduril Industries, Shield AI, HawkEye 360, Skydio, Rebellion Defense, and Epiru. In December 2022, the Defense Department launched the Office of Strategic Capital to connect AI and other startups with sources of private capital.

Key takeaways:

  • The Pentagon and U.S. intelligence communities have awarded contracts worth up to $53 billion to major tech firms between 2019 and 2022, as they look to deploy AI-enabled military technologies and use cloud computing services.
  • These contracts are making the Pentagon and CIA more dependent on the expertise of technical experts from the private sector, and may lead to Defense Department officials relying heavily on the goodwill and cooperation of tech leaders.
  • A significant amount of military funding is going to startups, with companies like Palantir, Anduril Industries, Shield AI, and others receiving contracts and funding.
  • The Defense Department launched the Office of Strategic Capital in December 2022, an entity set up to link AI and other startups with sources of private capital.
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