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Not everyone is buying Elon Musk\u2019s vision for orbital data centers<\/a>.\u00a0<\/p>\n Masayoshi Son, the founder and CEO of Softbank, argued at a recent shareholder meeting<\/a> that building data centers in space won\u2019t do much to cut costs and will take too long when \u201cin the battle for AI, the next few years will be far more important than what might happen a decade or so from now.\u201d<\/p>\n On the latest episode of TechCrunch\u2019s Equity podcast<\/a>, Kirsten Korosec, Sean O\u2019Kane, and I discussed Son\u2019s remarks as part of a broader discussion that included OpenAI\u2019s plans for custom chips<\/a>, chipmaker Groq\u2019s new $650 million funding<\/a>, and much more.<\/p>\n Kirsten noted that it\u2019s \u201cvery ironic\u201d that Son is playing the skeptic here, given SoftBank\u2019s \u201clong history of wild bets.\u201d<\/p>\n Sean, meanwhile, said that when Musk talks about \u201cmaking a constellation of satellites \u2014 satellites that need to be replaced every few years as well \u2014\u00a0 to make up an \u2018orbital data center,\u2019\u201d he\u2019s just \u201cguaranteeing that much more business\u201d for SpaceX.<\/p>\n Keep reading for a preview of our conversation, edited for length and clarity.<\/p>\n Sean O\u2019Kane:<\/strong> Listen, neo-clouds are the new oil, and everybody who wants to make money is pivoting to a neo-cloud. I\u2019m proud to announce that TechCrunch is now a neo-cloud, give us all your money.<\/p>\n I mean, this is the thing you do. It seems like there are so many players that are compute constrained, so anybody who has a shot at being able to lease out that compute is taking it, whether that\u2019s Groq, a company that was semi-hollowed out by Nvidia, or Allbirds, which went into bankruptcy and and emerged from it as a new neo-cloud provider instead of selling shoes \u2014 Tim Fernholz did an interview with the new CEO of of that new effort<\/a> that I would definitely recommend people go read.\u00a0<\/p>\n Or whether you\u2019re SpaceX, where your idea was: I\u2019m gonna build an AI platform that\u2019s gonna have an addressable market the size of U.S. GDP, but before we get there, we\u2019ll just rent out our compute.\u00a0 And we saw this continue to happen with SpaceX, where it\u2019s not as big as the deals that they\u2019ve struck with Google or Anthropic, but they just signed another deal<\/a>, [their] first post IPO deal, to rent out compute to another smaller player. They\u2019re continuing down that road.\u00a0<\/p>\n You know, I can see this being a business for Groq in the near term. The question with all of these is how durable is it in the long term.<\/p>\n Anthony Ha:<\/strong> If we\u2019re talking about SpaceX and their AI business and data center business, we also have to talk about these comments that Masayoshi Son, the CEO of SoftBank, made recently, where he basically said: What is the point of data centers in space?<\/a> Which is a question we\u2019ve asked on this show.\u00a0<\/p>\n And it speaks to, again, this sense in the industry of being really, really compute constrained \u2014 they need to build as many data centers as possible, [and] there\u2019s all kinds of reasons why that is proving to be challenging here on Earth, so maybe space is the answer. But I think Son makes some pretty fair points about: All this stuff we\u2019re talking about, even if it all works \u2014 and the costs are going to be very, very serious to make it work\u00a0\u2014\u00a0this is not happening for years and years and years, so this is not a solution to any immediate problem, as far the current need for data centers goes.<\/p>\n Kirsten Korosec:<\/strong> I just want to point out that SoftBank has a long history of making wild bets. I think it says something when Son comes up and asks the question that a lot of people have asked.\u00a0<\/p>\n I mean, there are a lot of VCs and founders [who] have been swept up into the idea of orbital data centers and it seems like suddenly everyone\u2019s on board. When just a couple of years ago, I think, if someone had mentioned that, it would get slapped down a little bit. So I do think it\u2019s an important part of the process that someone who has a pretty high profile is asking that question. But it is very ironic to me that he<\/em> is the one asking it, because if you look at his pitch deck<\/a>, they\u2019ve thrown a lot of money at some pretty bold ideas.<\/p>\n Sean:<\/strong> WeWork! Listen, we\u2019re going to be saying this for a lot over the next couple years. The idea of putting these things in space is going to be an interesting engineering challenge and certainly an interesting economic challenge.\u00a0<\/p>\n Anthony, what you said is definitely right to a certain extent. Elon Musk is a person who hates red tape and you know, there are no NIMBYs in space so of course he\u2019s going to try and do that.\u00a0<\/p>\n To me, it comes down to: The business as it stands now for SpaceX, especially its launch business, is just overwhelmingly reliant on Starlink. The reason that they are 80 or 90% of the launch market globally is not just because they\u2019ve done all these things that are better than pretty much every other launch provider around the globe, it\u2019s also because they have Starlink that is driving up that number. If you remove Starlink from the equation, they would be closer to \u2014 I don\u2019t know, maybe 20% or 30% of the launch market, or 40%, but it certainly wouldn\u2019t be 90%.\u00a0<\/p>\n And when you talk about making a constellation of satellites \u2014 satellites that need to be replaced every few years as well \u2014\u00a0 to make up an \u201corbital data center,\u201d quote unquote, you\u2019re just guaranteeing that much more business for your launch business. And I just can\u2019t stop myself from coming back to that point.<\/p>\n Kirsten:<\/strong> I want to really quickly say that [SpaceX\u2019s] other big business is renting out their compute, by the way. So back to the chip conversation. We\u2019ve come full circle.<\/p>\n Anthony:<\/strong> One of the other themes that may run through this episode is this idea of talking your own book<\/a>. This is not a new phenomenon. Executives at tech companies, or any other company, what they\u2019re predicting for the future is ultimately the future that is going to be advantageous to their business.\u00a0<\/p>\n But I think it\u2019s something that\u2019s just always worth remembering when we\u2019re having these conversations about big AI companies, because it is this moment of incredible uncertainty, and we\u2019re all wondering: What does the job market look like in the future? What effect is this going to have on the environment? What are the skills I need to learn?\u00a0<\/p>\n All these AI CEOs or AI investors, they all have thoughts on that. And it\u2019s not that they\u2019re wrong or that they are being deliberately misleading, but in each case, there\u2019s an asterisk to these predictions. In Musk\u2019s case, he\u2019s talking about something that would be very good for SpaceX\u2019s business. In SoftBank\u2019s case, they are very, very heavily invested in data center projects<\/a> here on Earth. Sam Altman is the other notable figure who\u2019s rolled his eyes a bit<\/a> at the orbital data center idea \u2014 and again, he and Elon Musk obviously have a long and complicated history together<\/a>.<\/p>\n All of which is to say that there\u2019s just no objective, impartial observers here. It\u2019s all these people with baggage and tremendous amounts of money at stake.<\/p>\n<\/div>\n When you purchase through links in our articles, we may earn a small commission<\/a>. This doesn\u2019t affect our editorial independence.<\/em><\/p>\n