How to Expand the Frontier Technology Market Beyond Its Narrow Focus

Public funding does more than support frontier technologies—it also helps create the markets that develop around them. Through government contracts, subsidies, benchmarks, infrastructure and purchasing channels, public agencies influence which companies gain experience first, which systems are adopted and whether future markets remain competitive or become controlled by a small number of suppliers.

Governments should recognize their role in shaping competition across emerging technology markets. Wherever possible, procurement and funding policies should expand market access rather than create gateways controlled by a few private companies.

Market concentration is already visible in parts of the space industry.¹ In artificial intelligence and quantum technology, decisions made today about which capabilities to fund and purchase—and how to evaluate, deploy and govern them—will influence future investment and adoption (see “U.S. Frontier Technology Markets”).

A leading frontier-technology supplier may owe its position to superior performance. However, repeatedly awarding contracts to the same company can create long-term risks when future projects are designed around that supplier’s existing system.

Governments should therefore adopt safeguards that account for how procurement, evaluation and technology-adoption decisions shape future markets. The central principle is contestability: public support should reward current performance without preventing future suppliers from accessing the data, infrastructure and evaluation channels they need to offer better solutions and compete on merit.

How Does Technology Lock-In Occur?

The space sector illustrates how market constraints can develop. Governments are major customers for space services, and their procurement decisions determine which companies gain experience, build capacity and attract additional investment. Once a mission begins, the resulting performance data provides evidence of what works and can give the incumbent supplier an advantage in future contract decisions.

For example, SpaceX, headquartered near Brownsville, Texas, received approval from the U.S. Federal Aviation Administration (FAA) in fiscal year 2024 to conduct 118 launches—83% of the total.¹ In April 2025, the company was awarded seven of the nine national-security launch missions funded that year, worth a total of US$846 million. The remaining two missions went to another established provider for US$428 million.^{Read more.}

In launch services, a supplier’s advantage may come from a record of reliability built through multiple successful missions. In cloud computing and artificial intelligence, it may result from agencies becoming accustomed to one way of purchasing, securing and operating systems. In quantum technology, publicly funded testing facilities and official evaluations may make some technical approaches appear more credible than others.

The key question is whether today’s procurement choices will make tomorrow’s alternatives prohibitively expensive or impractical. For consumers, switching platforms may require moving data or rebuilding interfaces. For businesses, entering a market may depend on access to technical information, infrastructure or standards controlled by existing suppliers.

In the space sector, NASA estimates that bringing in new suppliers for key components of the Space Launch System could cost more than $4.5 billion and delay launches by 10 years because existing contractors hold critical technical data.² For cloud services, the UK Competition and Markets Authority found in 2025 that fewer than 1% of customers switch providers each year. The primary reason is that the expected benefits do not outweigh the cost of changing services.³

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The consequences can extend across critical infrastructure. Satellites support positioning, navigation and timing, communications, environmental monitoring and national defense.⁴ If multiple public missions depend on only a few suppliers, a cyberattack, production shutdown or other disruption at one company could affect many missions simultaneously.

A lack of alternative providers also weakens the government’s bargaining power and reduces competitive pressure on price, quality and innovation. The risks become greater when one company controls satellites, data, downstream services and launch capabilities. Such vertical integration can influence access, pricing, interoperability and technical standards.

Safeguards are therefore needed before an early advantage becomes a market bottleneck. Agencies should identify what future suppliers will need to access systems, connect compatible products, complete evaluations and replace incumbent providers. The strength of future competition will depend on whether those pathways are practical and affordable.

Examples of Broader Government Procurement Strategies

Some public programs are already taking steps to preserve market competition. These measures include contracting with multiple companies, using staged evaluations that allow new entrants to participate later, creating open interfaces that are not tied to one vendor and maintaining clear channels for supplier entry. However, such safeguards remain inconsistent across sectors.

NASA’s Commercial Lunar Payload Services program provides one example. Rather than managing every lunar mission itself, NASA purchases delivery services from multiple commercial providers. This approach allows the agency to distribute risk, compare performance and share lessons across suppliers. Early failures can be absorbed without allowing one mission to determine the future of the entire market.

For example, Astrobotic Technologies’ Peregrine Mission One launched in January 2024 but did not reach the lunar surface. One month later, Intuitive Machines’ IM-1 mission launched from Houston, Texas, and achieved the first commercially successful soft landing on the Moon, although the spacecraft later tipped over. Firefly Aerospace’s Blue Ghost then launched and successfully landed upright in March 2025 while carrying 10 NASA payloads. Days later, Intuitive Machines’ IM-2 landed on its side, returning data but ending its mission earlier than planned.

These experiences will inform future mission designs. However, improving systems after early missions can require additional funding and schedule changes. A 2024 NASA audit found that five of the eight task orders examined were delayed, increasing costs by $208 million.⁵

Market-building programs require clear milestones, defined endpoints and cost controls so that public agencies do not support suppliers indefinitely. At the same time, procurement systems must remain flexible enough to incorporate new evidence and technical advances.

Space diplomacy: Bridging the operational gap between myriad missions

A phased commitment can help. Agencies can purchase the services they need today while holding suppliers to reliability and cost requirements. At the same time, future providers should have a transparent route to qualify, compete and win contracts. This model should become standard practice in frontier-technology procurement.

NASA’s Commercial Orbital Transportation Services program, which ran from 2006 to 2013, was designed to encourage private development of spacecraft for cargo delivery to the International Space Station. NASA made payments when suppliers achieved technical milestones and divided awards among multiple partners while the commercial freight market was still developing. The U.S. Space Force uses a similar contracting approach by allowing new launch providers to qualify when they are ready. In 2025, NASA awarded Blue Origin, a space-technology company based in Kent, Washington, a mission order for the Volatile Materials Investigating Polar Exploration Rover. Funding for preparatory work was separated from the agency’s later decision about whether to purchase delivery services to the Moon.

The European Space Agency’s European Launcher Challenge also seeks to increase choice through a step-by-step process. The European Union’s Secure Connectivity Satellite Constellation Program, IRIS²—the Infrastructure for Resilience, Interconnection and Security by Satellite—supports new entrants and requires some large contracts to be subcontracted to companies other than the largest providers.

India allows private companies to operate across the space value chain, including satellite construction and operations, as well as rocket development and launch services. The government manages these activities through two agencies: IN-SPACe, which authorizes and supervises private-sector activities, and the Indian Space Research Organisation, which focuses on research and development, training and technical expertise. A government-approved venture-capital fund of approximately $120 million is intended to ease financing constraints. It remains to be seen whether these initiatives will help promising companies become viable competitors.

What Quantum Computing and AI Markets Need

The quantum-technology market is still emerging, so governments must assess competing technical claims and decide which services are mature enough to support. The UK’s National Quantum Strategy, for example, has pledged £2.5 billion (US$3.4 billion) in public funding for quantum research and development over 10 years from 2024.⁶

Government-certified benchmarks, testing facilities and technical standards can give commercial users confidence before it is clear which approach will succeed. The risk is that authority over testing and reliability becomes centralized. If only a small number of organizations control access to standards, facilities and evaluation processes, competing developers may struggle to produce the evidence needed to gain credibility.

One safeguard is a clearly defined, staged evaluation process that remains open to new entrants and gives competing approaches a fair opportunity to demonstrate their potential. In the United States, the Defense Advanced Research Projects Agency’s (DARPA) Quantum Benchmarking Initiative demonstrates how this approach can work across three stages.

Rather than selecting an architecture based on early promises, DARPA’s Stage A asks whether a proposal offers a credible path to a quantum computer whose computational value could exceed its cost. In Stage B, researchers examine the development plan, including technical risks, mitigation strategies and the prototypes required to test the approach. In Stage C, DARPA works with each company to verify whether its proposed computer can be built as designed and operate as intended. Each approach is evaluated on its merits, without setting a predetermined number of successful technologies. Weak claims can therefore be rejected without closing the market prematurely.

There are trade-offs. Evaluations must be rigorous enough to test technical claims, protect intellectual property and preserve the integrity of the process. However, they must not be so narrow that they lock the market into one technology design before sufficient evidence shows which approach is most effective.