Skip to main content
About HEC About HEC Faculty & Research Faculty & Research Master’s programs Master’s programs MBA Programs MBA Programs PhD Program PhD Program Executive Education Executive Education Summer School Summer School HEC Online HEC Online About HEC Overview Overview Who
We Are Who
We Are
Egalité des chances Egalité des chances HEC Talents HEC Talents International International Campus
Life Campus
Sustainability Sustainability Diversity
& Inclusion Diversity
& Inclusion
Stories Stories The HEC
Foundation The HEC
Coronavirus Coronavirus
Faculty & Research Overview Overview Faculty Directory Faculty Directory Departments Departments Centers Centers Chairs Chairs Knowledge@HEC Knowledge@HEC Master’s programs Master in
Management Master in
Programs Master's
Double Degree
Programs Double Degree
Programs Summer
students Exchange
Life Student
MBA Programs MBA MBA Executive MBA Executive MBA TRIUM EMBA TRIUM EMBA PhD Program Overview Overview HEC Difference HEC Difference Program details Program details Research areas Research areas HEC Community HEC Community Placement Placement Job Market Job Market Admissions Admissions Financing Financing Executive Education Executive Masters Executive Masters Executive Certificates Executive Certificates Executive short programs Executive short programs Online Online Companies Companies Executive MBA Executive MBA Infinity Pass Infinity Pass Summer School Youth Programs Youth Programs Summer programs Summer programs HEC Online Overview Overview Degree Program Degree Program Executive certificates Executive certificates MOOCs MOOCs Summer Programs Summer Programs Youth programs Youth programs


Space Industry Faces Deep Transformations Post-COVID-19

Published on:

The image of a Falcon rocket topped by the Crew Dragon capsule designed and manufactured by private company SpaceX as part of a NASA mission, has struck world public opinion in May 2020. Like its landing in the Gulf of Mexico a few weeks later, in early August. It illustrates the profound changes that have affected the space industry in recent years. In this article, Professor of international business law Lucien Rapp describes the transformation of the space industry and the strategies developed to enter the space market, as well as the challenges of its privatization for the future of the industry.

Falcon space rocket launch - wallpaper flare

Falcon space rocket launch. Photo Credit: Wallpaper Flare

Space activities: from exploration to exploitation 

For a long time, space activities were dominated exclusively by an exploration objective, placing them in major public initiative programmes, financed entirely by public funds. These programmes have given rise to industrial sectors based around a few major principals and a multitude of subcontractors at different levels. These industrial sectors are still today at the heart of the space economy, including the French satellite construction and launch sectors, defining France as a space power. 

Only recently, space has gradually entered a phase of exploitation. This new phase corresponds to a more commercial approach to space activities and a greater dependence of terrestrial activities on their services and techniques. Space activities are then more deeply rooted in the economies of the States. 

The geolocation tools (the famous "GPS"), which equip almost all mass-produced vehicles in circulation and telephones in use, is a magnificent illustration of this. It establishes a lasting link between two hitherto alien industrial ecosystems: that of mechanical engineering and that of space activities. It strengthens their respective futures.


Space activities are deeply rooted in the economies of the States. The GPS technology that equips almost all mass-produced vehicles and phones is a topical illustration.


New markets have opened up, in which new operators have entered, triggering the interest of private sector financiers in emerging and promising industrial projects. By the end of 2019, some 170 space-related industrial projects had raised the equivalent of $5.7 billion. Although we cannot speak of a "bubble" as for Internet-related projects, this sum is significant enough to attract attention. It is all the more so because the guarantees offered in exchange for this financing concern industrial projects that are deployed in space, i.e. outside the scope of traditional legal mechanisms for securing investments.


New markets have opened up, triggering the interest of private sector financiers in emerging and promising industrial projects.


New value chains have emerged, branching out into activities, particularly services. They are increasingly sophisticated and intrinsically linked to the industrial fabric of each State: design and manufacture of satellite; launch; operation; maintenance in orbit; production of earth observation data, and soon, their exploitation in processing methods using self-learning algorithms. 


Elisabetta Monaco on Flickr." data-embed-button="embed_image" data-entity-embed-display="view_mode:media.embed_image" data-entity-embed-display-settings="{"link_url":"","link_url_target":0}" data-entity-type="media" data-entity-uuid="b94e298a-a1c0-434a-bdbd-c824bda14651" data-langcode="en" class="embedded-entity"> Space Center control center in French Guiana - Elisabetta Monaco on Flickr
Space Center control center in Kourou, French Guiana (2011). Photo by


Those activities provide commercial services in almost common use: meteorology and climate change; monitoring of fishery or mining resources; monitoring of critical installations (nuclear and photovoltaic power plants, gas and oil pipelines) and of the seas and oceans; agriculture (irrigation, fertilizers); geolocation and consequently transport and distribution industry, urban and peri-urban mobility, etc.

New industrial ecosystems of medium-sized principals, new types of subcontractors, operators and customers corresponding to new uses of satellites have been created in the earth-space segment, space-earth and more recently space-space segment with the promise of On-Orbit Servicing


Private space industry: how entrepreneurs challenge the traditional business models

For a moment, one might have thought about a shift in the space economy, away from its domination by governments and their space agencies, geopolitical concerns and power relations between States, national programmes and public procurement, space sanctuarization and space regime articulation around major universally accepted principles. 

A market and entrepreneur economy was being established, more open to private initiatives, more innovative and more attractive, challenging the historical players by making better use of existing resources. 

This privatization of space activities, with the arrival of many private operators coming from competitive sectors, accelerated a movement that challenged the traditional operators development models, such as the inertia linked to their size or caused by the duration of the programmes they were involved in. 

Also, over the last few years, one could observe how private operators of international stature were able to transform new technical concepts (small satellites, electric propulsion, assembly in space) into industrial and commercial achievements.

Entrepreneurs with a low-price approach might inhibit disruptive innovation

This - incidentally very positive - industrial effervescence reveals many weaknesses. The sustainability of these new industrial projects, very capital-intensive, depends to a large extent on the ability of external financiers to support them. They rely, not only on the confidence inspired by the projects, but also on the economic situation, both national and international. 

The new entrants success to the space market is built on aggressive strategies based on an ability to decide more quickly, on increased risk-taking, on a tolerance for failure, on acceptance of lower levels of reliability, but also, for most of them, on innovations in use and not in products (with the possible exception of micro- and nano-satellites).


The new entrants success to the space market is built on aggressive strategies based on an ability to decide more quickly, on innovations in use, and on a low-price approach.


Entrepreneurs’s industrial models remind the low-cost airlines or telecommunications companies ones. One weakness sign is the vogue for "re-use" of launchers and satellites that are kept in operation beyond the end of their product life. This vogue has been very attractive in a context of great sensitivity to pollution of all kinds, starting with that caused by the accumulation of space debris in near space. 

Yet, one may wonder whether it is more a low-price approach (more in line with the strategy of operators entering a market open to competition) than a low-cost approach (attentive to the economy of means and the preservation of the environment). 

The rejection of the existing legal framework on the part of several of these incoming operators, distances these strategies from the model of disruptive innovation, theorized by Clayton M. Christensen (Innovator's Dilemma, 1997).

Space industry facing deep transformations post-COVID-19

The economic crisis caused by the COVID pandemic-19 and the population containment may have reshuffled the cards and opened a new phase in the evolution of space activities. They affect the space sector in the same way as all other industrial sectors, with a differentiated impact depending on the activities. 

The postponement of launch schedules, the stoppage of many satellite production lines and the drying up of private financing have disorganized emerging operators, causing new weaknesses here and there. 

In a context that has become uncertain and for different reasons, some of these operators (One-Web, Intelsat) have deemed it preferable to file for Chapter 11 protection under the US Bankruptcy Act. Admittedly, their difficulties were already there, and the slowdown in world economic activity suggested that the globalization movement that had served them well up to that point was likely to have a lasting impact. 

One word was flourishing, "slowbalization", to describe this multifaceted process of the free trade and economic liberalism excesses. It was both an objective observation and a wish expressed.


Three sets of activities should continue to dominate the sector: earth observation, space communications and satellite navigation.


But a study carried out in April 2020 by the PwC firm revealed conclusions on the resilience of space activities. Certainly, three sets of activities should continue to dominate the sector: earth observation, space communications and satellite navigation. But each of them is registering new vulnerabilities that may well cloud their future as well. 

The mobilization of funding to maintain activity in the Earth observation sector could be to the detriment of the R&D effort that the sector needs. The success of space communications depends on the development of a service industry deployed downstream of its activities, which must monitor its costs in order to achieve this. Space navigation-related activities have revealed their over-reliance on Chinese equipment manufacturers. This will have to be corrected through diversification or relocation strategies.


Air Force Reserve" data-embed-button="embed_image" data-entity-embed-display="view_mode:media.embed_image" data-entity-embed-display-settings="{"link_url":"","link_url_target":0}" data-entity-type="media" data-entity-uuid="4c1b75fe-3807-4b12-83a8-aefc08decb04" data-langcode="en" class="embedded-entity"> Satellite operators keep space players in line - Maj. Jessica D'Ambrosio
Satellite operators keep space players in line (satellite technicians change feed horn). Photo by Maj. Jessica D'Ambrosio. Source:

More than ever, the future of space activities depends on three factors:


1. Increased vigilance with regard to situations of monopolies and oligopolies resulting from a market split between one or two dominant operators and a multitude of small or medium-sized operators; no doubt that competition law, beginning with merger law, will see major developments in the space activities sector in the years ahead;

2. The capacity of States to organize the industrial eco-systems establishment around a few major ambitious programmes through a targeted and intelligent public procurement policy. It is interesting to observe the way NASA is conducting the ARTEMIS programme and the collaborative strategies it triggers on the part of the operators concerned. Here it is the National Team initiative, led by Blue Origin (created by Jeff Bezos), and there it is the C-Band Alliance between the world's Big 4 satellite operators. These industrial initiatives, all American or North American, make no secret of their intention to source their supplies from North American manufacturers, hence practicing a policy of national industrial preference; 

3. The sanctuarization of sensitive industrial assets in the space sector through foreign investment control policies that systematically require authorization for financial equity investments that may correspond to predation strategies or policies. 

15 Things You Didn’t Know About The Space Industry, by
Article by Lucien Rapp, University Toulouse-Capitole, HEC Paris and SIRIUS Chair Professor of international and competition business law, based on his article, "Artificial Intelligence in Space", authored with George Anthony Gal of Legal Parallax, LLC, USA, and Cristiana Santos, Réka Markovich, and Leendert van der Torre of the University of Luxembourg. Find the full article here.

Related content on Law


How Will New European ESG Reporting Standards Affect Companies?

By Marieke Huysentruyt

Social Innovation
Addressing the "S" Demands of ESG - Editorial
Eloic Peyrache - HEC
Eloïc Peyrache
Professor, Dean
Thinking Deglobalization
Guillaume Vuillemey - news vignette- HEC Paris
Guillaume Vuillemey
Associate Professor

Human Rights Sanctions Often Fail to Improve Human Rights

By Armin Steinbach

Subscribe button for Knowledhe@HEC newsletter

Newsletter knowledge

A monthly brief in your email box and 3 issues of the book per year.

follow us

Insights @HECParis School of #Management

Follow Us

Support Research

Our articles are produced thanks to our reader's support