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Are U.S. Drone Companies Ready to Replace DJI? What the American Security Drone Act Means for the U.S. Drone Industry—Part 1 of 3

BY Zacc Dukowitz
7 May 2020

A few months ago, the American Security Drone Act of 2019 was unanimously passed out of Committee by the Senate Homeland Security and Governmental Affairs Committee.

This means that the Act is well on its way to becoming law.

In fact, according to an industry insider we know who works in policy and regulatory affairs in Washington, D.C., it looks likely the law will be passed “before the end of the year.”

Since the American Security Drone Act was first introduced in 2019 its name has become synonymous in the drone industry with a potential ban on Chinese drones and drone components, or, more specifically, a ban on DJI drones.

Image source

The idea of such a ban has a lot of people worried, and not just those who work at DJI.

Two of the biggest concerns we’ve heard related to a potential Chinese drone ban and the American Security Drone Act are:

1) A ban on Chinese drones for local, state, and federal agencies would kneecap public safety agency drone programs, since 90% of them use DJI drones according to a recent study from Bard’s Center for the Study of the Drone.

2) A ban on Chinese drone components could have a devastating impact on U.S. companies that rely on Chinese drone components in their supply chain (as well as non-Chinese drone companies that sell drones in the U.S., for the same reason).

We wanted to figure out what might happen if a sweeping ban on Chinese drones and drone components were enacted, so we started talking to U.S. drone companies. What we learned surprised us.

This article is the first in a three part series on the American Security Drone Act of 2019, U.S drone companies, and the future of the U.S. drone industry.

The American Security Drone Act of 2019—Rumor vs. Fact

In all the interviews we’ve done recently with leaders at U.S. drone companies, we’ve started off with the same line of questioning:

What would the U.S. drone landscape look like if DJI drones were suddenly banned from all government agencies (local, state, and federal)? Could you fill the vacuum that would be created at public safety agencies and elsewhere?

A Picture Featuring a DJI Government Edition Drone

We heard a lot of interesting answers to these questions (we’ll cover those in next week’s article).

But it turns out our questions were based on a flawed premise, because 1) Any ban proposed by the Act wouldn’t go into effect overnight, and 2) There is no proposed ban for state and local agencies.

So before we take a closer look at U.S. drone companies and their potential to replace DJI, we need to establish clarity on what the American Security Drone Act actually says and will require.

Let’s start by parsing out rumors from fact. Based on our research, here are the relevant facts about the Act:

  • It will ban Chinese drones and drones made with Chinese components from use by federal agencies only.
  • State and local agencies will not be allowed to use federal grant money to buy Chinese drones or drone components.
  • Both the federal agency ban and the restriction on the use of government funds will go into effect two years after the law passes.

Now with these facts in mind, let’s look at some of the more common rumors about the Act.

Local and state public safety agencies will have almost all of their drones banned (since they’re either made in China or contain Chinese drone components).

False. Local and state public safety agencies will have no requirements placed on the drones they use. If they already own drones made in China, they can continue to use them. And if they want to buy more drones made in China, or made with Chinese drone components, they can—they just won’t be able to use federal grant money to do so starting two years after the Act passes.

Note: There has been buzz that even if the Act doesn’t require such a sweeping ban for local and state agencies, an Executive order might be put in place that would. Based on our research we have found this rumor to be false.

The ban will go into effect immediately.

False. To allow for a period of transition, the federal ban and the ban on federal grants for Chinese drones/drone components will not be put into place until two years after the Act becomes law. During those two years federal agencies will be allowed to use any drone they already have in their fleets, they just will not be able to buy more drones made in China.

U.S. drone companies that use Chinese components in their drones will be banned from use.

True—kind of. While it’s true that drones that contain Chinese drone components will be banned from federal agencies there will be a two year transition period before this requirement goes into place. When you consider that the drone industry has sprung up in the last four or five years, two years is a long time. Also, state and local agencies will not have this restriction placed on them, except when it comes to how they use federal grant money.

How Many Public Safety Agencies Use Federal Grant Money to Buy Their Drones?

It’s hard to say.

Data from Bard’s Center for the Study of the Drone recent study on public safety agencies suggests that 28% of funding for drone programs for public safety agencies comes from grants:

Source: Bard Center for the Study of the Drone

However, we don’t know how much of that grant money is state or local vs. federal. Also, the study only reported on funding sources for 283 public safety agencies, but we know that there are at least 1,578 public safety drone programs in the U.S. according to the same report.

Is the American Security Drone Act a Misguided Political Ploy?

One last rumor we need to address about the American Security Drone Act is that it’s being pushed forward by politicians in Washington who don’t really understand the drone industry.

As this the narrative goes, those proposing the Act don’t understand the impact a ban on Chinese drone components could have on the U.S. supply chain, not to mention on public safety agencies. They just want to be seen as tough on China.

But something else we’ve learned in our research is that the American Security Drone Act appears to be a fully bipartisan initiative.

Not only has it been supported by Democrats and Republicans alike, it was passed unanimously to the floor of the Senate, which we hear is unusual.

Our contact in D.C. also pointed out that for every single member of the Committee to pass the Act to the Senate floor in an election year implies that they may have access to intelligence we don’t regarding data sharing concerns and Chinese drones.

How We Got Here

So why are we even talking about banning Chinese drones?

The mistrust of drones made in China can be traced all the way back to the Army’s ban on DJI drones in August of 2017.

At the time, the Army was concerned that DJI might be sending data back to the Chinese government, and issued a blanket ban. And this ban really was sweeping—everyone in the Army was told to stop using DJI drones immediately.

Since then we have seen several stories regarding data sharing concerns and DJI drones.

Here’s a timeline of major events:

  • August, 2017. U.S. Army issues a blanket ban on all DJI drones based on allegations that DJI’s drones were secretly configured to collect and send user data back to DJI.
  • October, 2017. DJI responds by releasing Local Data Mode, which allows pilots to fly without any data being shared.
  • November, 2017. Internal memo is leaked from the Department of Homeland security saying that DJI is using its drones to collect sensitive information in the U.S. and share it with the Chinese government.
  • April, 2018. DJI hires San Francisco-based Kivu Consulting, Inc. to review its privacy practices. The resulting report absolves DJI of malicious or negligent data sharing practices but privacy concerns linger.
  • May, 2019. The Department of Homeland Security issues an advisory in which it warns companies that their data may be at risk if they use drones made in China.
  • June, 2019. DJI releases Government Edition, a line of drones made to ensure complete privacy of data, including photos, video, and locational data. At the same time, DJI announces that it will begin making drones within the U.S. and sends an open letter to the Senate Committee on Commerce, Science, and Transportation and the Senate Subcommittee on Security.
  • November, 2019. The American Security Drone Act of 2019 is proposed in the U.S. House of Representatives.
  • January, 2020. The Department of the Interior grounds all its drones due to concerns that Chinese parts in them could be used for spying. DJI publishes a statement calling the ban “politically motivated” the day it is announced.

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