The regulatory battle over orbital datacenters has taken a sharp turn, with SpaceX exposing what it sees as a glaring inconsistency in Amazon's position. After Amazon objected to SpaceX's application for up to one million datacenter satellites, SpaceX's satellite policy manager Cecilia Tenge-Rietberg fired off a letter to the Federal Communications Commission on Friday pointing out that Blue Origin has filed an application to launch up to 51,600 data processing satellites into low Earth orbit.
The move is a calculated jab at Amazon's credibility. Blue Origin is owned by billionaire Amazon founder Jeff Bezos, making the two companies family relations rather than independent competitors. SpaceX's argument is straightforward: if Amazon believes SpaceX's application is incomplete and speculative, the same scrutiny should apply to Blue Origin's nearly identical proposal. SpaceX argues with impeccable logic that the FCC should apply the same treatment to both applications.
Amazon's original objection was blunt. Amazon criticised the SpaceX application as "incomplete, speculative, and unrealistic," arguing that the filing provided only the barest outline of how Musk's firm expects to deliver on its grandiose plans. Blue Origin's own letter dismissed the SpaceX application as describing "a lofty ambition rather than a real plan".
Yet for all the regulatory posturing, the deeper issue is whether any company can actually make orbital datacenters work. Gartner recently branded talk of placing datacenters in space as "peak insanity," saying companies are wasting money on this fad due to the prohibitive costs of getting anything resembling a server farm into orbit and the immense technical challenges of operating them there.
The technical obstacles are substantial. The total cost of a satellite network would be around US $51 billion, including launch and five years of operational expenses, while a comparable terrestrial system would cost about $16 billion over the same period. Launch costs alone pose a significant challenge to building large orbital data centres, not to mention the need to replace onboard chips every five to six years.
Advocates argue the economics could improve if launch costs fall dramatically. Google's analysis suggests that with a sustained learning rate, prices may fall to less than $200/kg by the mid-2030s, at which point the cost of launching and operating a space-based data centre could become roughly comparable to the energy costs of an equivalent terrestrial data centre. But that timeline remains distant and speculative.
For now, the regulatory dispute continues. The FCC's Space Bureau set a deadline of March 23, 2026 for replies to responses and oppositions on SpaceX's application, meaning the agency is actively processing both proposals. Whether orbital datacentres ever become viable infrastructure or remain a costly distraction, the FCC will eventually have to decide.