Drone Policy in the U.S. and Ukraine: Addressing Foreign Control of a Key Technology

The Russian-Ukrainian War has seen the rise of new tactics involving small commercial drones, including the use of drones as improvised anti-tank weapons, suicide weapons, and reconnaissance tools for artillery units. Ukraine goes through a staggering ten thousand drones a month—at a minimum.¹

The United States has contributed drone technology to Ukraine in many forms, giving drones as humanitarian aid, providing surveillance through Global Hawk drones, sending money to help Ukraine buy drones, and sending smaller drones to the Ukrainian military.² The vast majority of drones used and purchased by Ukrainians, however, are from the Chinese company DJI, the largest commercial drone manufacturer in the world.³ The company controls 70 percent of the global market for commercial drones.⁴ Founded in 2006, DJI initially manufactured drone components before pivoting to manufacturing the drones themselves. By 2016, DJI drones were the most popular drones in the United States, representing half of all commercial drone purchases in the country.⁵ The other manufacturers represented much smaller portions of the total drone market.

Both Congress and the Department of Defense view DJI as a national security threat due to concerns over the company’s activities within mainland China. These include reports of DJI’s collaboration with the People’s Liberation Army and involvement in the Uyghur genocide in Xinjiang.⁶ As a result of these allegations and the cybersecurity risks posed by DJI’s relationship with the Chinese government, the United States has taken steps to prohibit the federal use of Chinese drones.

Yet banning Chinese drones is not enough to bolster American drone manufacturing, as policymakers have gradually realized. At the federal level, Congress has introduced legislation such as the Drone Infrastructure Inspection Grant Act to subsidize American drones for transportation departments.⁷ At the state level, Florida passed a $25 million spending package to help police departments replace their Chinese drones. Nonetheless, this recognition is only partial. Other states that have banned the use of Chinese drones in their state agencies, such as Texas, have not provided equivalent support. Local organizations, such as police agencies, often protest such restrictions on DJI and Chinese drones—understandably, given the high costs of replacing their existing drone fleets.⁸

Ukraine, like the United States, is also trying to transition away from reliance on DJI, but the source and method of the transition are slightly different. For example, Ukrainian hackers have been modifying DJI drones on their own to make them safer to use, and Ukrainian NGOs have been working with the Ukrainian government to develop their drone production capabilities. These efforts are driven on the demand side by Ukraine’s need for more drones, and on the supply side by DJI’s attempts to reduce the flow of its drones to Ukrainians, as well as Russian electronic countermeasures (such as communication and radar jamming) that make DJI drones less useful for Ukrainians.

The United States and Ukraine thus represent two different approaches to dealing with the problem of an untrustworthy trade partner that is also the main source of a critical technology. The United States seeks to ban and replace Chinese-manufactured drones via legislation. Ukraine, meanwhile, because of cybersecurity and supply-chain vulner­abilities, is working on alternatives to DJI drones to ensure a consistent supply.⁹ Many of these alternatives in Ukraine have come from indi­viduals un­connected to the Ukrainian government, who are developing drones on their own.

Learning about the history of America’s drone industry can ensure policymakers are aware of why DJI is a threat, and why industrial policy is required to bolster America’s drone industry. Learning about Ukraine can help us understand what happens when a critical technology gets sabotaged, and how a country and its people can respond.

America and DJI

The year 2014 was an important one for the American commercial drone industry. That year, the Federal Aviation Administration (FAA) legal­ized the commercial use of drones in the United States, ending a ban it imposed in 2007. Several major companies entered the space, such as Skydio and 3D Robotics. At the same time, the entry of Chinese companies, already well established in the commercial drone industry, would soon make this market far more competitive.

China, unlike the United States, had never banned drones for commercial use. Small commercial drone companies began to appear in China in the early 2000s. The largest company started during this period is DJI. Just four years after its founding in 2006 as a drone parts maker, DJI drones became the most common drones in the United States.¹⁰

Several factors account for DJI’s success. Its drones are high quality and very customizable, with venture capitalists even comparing DJI to Apple in terms of quality.¹¹ More importantly, DJI drones are affordable for the average consumer. The reason for these low prices is not so benign: DJI is able to maintain low costs partly because of state funding. DJI’s investment from China Chengtong Holdings Group, a Chinese investment fund run by the Chinese-government-controlled asset man­ager Assets Supervision and Administration Commission, insulates the company from market pressure.¹² Thus, DJI can engage in price dump­ing without worrying about its bottom line. The Department of Homeland Security, in a report released in 2017, revealed that in 2016 DJI reduced the prices of its drones by as much as 70 percent to compete against new entrants in the commercial drone market.¹³

DJI’s price dumping allowed it to outcompete American companies, including 3D Robotics.¹⁴ When 3D Robotics pivoted to producing consumer drones in 2014, it received hundreds of millions in venture capital funding, but not enough to counter DJI’s de facto state support. 3D Robotics’ drones also faced technical problems. With DJI continuing to cut its prices, 3D Robotics ceased manufacturing drones in 2016 and soon shutdown.

Since the FAA legalized commercial drone operations in 2014, the private and public sectors have begun to employ drones more frequently. Examples include transportation agencies using drones for surveying, and forestry agencies using drones to help fight wildfires. DJI drones can be found throughout all levels of government, from police departments to the Secret Service and FBI, through to agencies such as the Department of Agriculture.¹⁵ Given DJI’s quality, price, and the general lack of alternative commercial options, it is hardly surprising that DJI drones are popular across the American government.

But DJI poses serious security risks: The CCP has a history of requiring backdoors into technical equipment, and DJI equipment could very well contain such backdoors, thereby potentially providing the CCP with access to the data their drones collect. An intelligence law passed by the Chinese government in 2017 requires Chinese companies to comply with any intelligence requests of the CCP.¹⁶ This makes DJI much less trustworthy: it is required to give to the CCP any data it might collect if asked to do so.

It is these cybersecurity and operational risks that originally sparked concerns within the federal government around the usage of DJI drones. In August 2017, the Army downed all its DJI drones because of cyber­security concerns.¹⁷ In 2019, the National Defense Authorization Act (NDAA) for fiscal year 2020 restricted the Department of Defense from buying Chinese drones and drones with key parts manufactured in China.

To ease the process of buying non-Chinese drones, the NDAA created a program called Blue UAS, managed by the Defense Innovation Unit (DIU) within the DoD. The DIU solicited the drone industry for producers of relevant components (software, cameras, gimbals) and awarded several companies contracts to produce these components and drones. Then in 2020, DIU launched its second iteration of the program to find more companies to produce small commercial drones for the DoD.

The program has been successful. For example, in the first version of Blue UAS, the drones DIU selected were placed in the General Services Administration Schedule, a difficult feat.¹⁸ A GSA Schedule is a long-term government-wide contract between the U.S. government and a commercial company to enable streamlined purchases of goods and services. There has been a drawback to this program, however: the Department of Interior (DoI) has complained that these drones cost eight to fourteen times what their Chinese equivalents would cost.¹⁹

DoI’s experience with DJI offers another important case study. DoI was an early adopter of drones as a relatively cheap tool for surveying and firefighting, using them as early as 2004.²⁰ The DoI was also one of the first federal agencies outside the DoD to think about the security risks associated with the use of Chinese drones back in 2017, and only started using DJI drones after 3D Robotics closed.²¹ In 2020, DoI took a more aggressive stance toward DJI, downing all the Chinese drones in its fleet because of cybersecurity concerns.²² This had the predictable downside of dramatically lowering the amount of drone flights in 2020 and 2021.²³ The process of ending the use of Chinese drones was far harder than DoI expected, to the point that DoI, as of 2022, still primarily utilizes DJI drones for its operations.²⁴

Despite mixed records of success, restrictions on Chinese drones have since gained popularity, especially at the state level. By August 2023, seven states had banned the use of Chinese drones in their state drone fleets in some form. While popular with state legislators, drone bans have been unpopular with the agencies they are targeting, with police agencies representing the largest source of dissent.²⁵ Police agencies dislike these drone bans as they correctly perceive non-DJI drones to be more expensive than DJI drones and likewise resent the fact that they must replace their existing drone fleets.

In recent years, Congress has also gotten more serious about prohibiting federal agencies from using Chinese drones. Congress is on its third attempt to pass the American Security Drone Act with bipartisan support, in the fiscal year 2024 NDAA, which would ban the use of federal funds to buy Chinese drones. The recent Homeland Security funding bill in the House would ban the use of Department of Homeland Security funds to buy Chinese-manufactured drones.²⁶ The appropriations bill does not provide funding to replace Chinese drones within the DHS. But through DHS grant programs, states and urban areas can access over $1 billion in grants that can be used to replace Chinese drones.²⁷

There are also bills within Congress that would strengthen the Amer­ican drone industry. The DIIG Act would appropriate $200 million for grant programs to subsidize state and local transport agencies to buy American-manufactured drones for transportation purposes.²⁸ The Na­tional Drone and Advanced Air Mobility Research and Development Act, introduced this year, would require NASA to establish a drone research and development grant program. Even if these bills pass, however, there will still be implementation challenges as federal agencies and states that prohibit the use of Chinese drones begin replacing their existing drone fleets.

Ukraine and DJI

In Ukraine, we see a different approach to dealing with DJI. There have been both grassroots and government efforts to spur domestic drone production. Ukraine is also a test case for what happens when a political adversary controls a critical technology.

DJI drones have figured in the Russian-Ukrainian conflict since 2014, for reconnaissance, surveillance, and bombing runs.²⁹ NGOs have heavi­ly influenced both the Ukrainian military’s use of drones and Ukraine’s domestic production of drones. NGOs such as Aerorozvidka have trained Ukrainians on how to use drones in warfare since 2014. Some NGOs, including Aerorozvidka, have a very close relationship with the Ukrainian government. There was even a period when the Ukrainian Army absorbed a part of Aerorozvidka.

Other NGOs are smaller and take a more local approach, donating only to military units in their network. The NGO Dzyga’s Paw, for example, has not only used donations to buy thousands of drones for Ukrainian army units that the volunteers have contacts in but has also taught Ukrainians in these army units how to use drones.³⁰ The NGO essentially consists of one person and several of his friends working as volunteers.

Beyond training Ukrainians on using and purchasing foreign drones, NGOs have helped manufacture drones in Ukraine. For example, Aerorozvidka manufactures a drone meant to be an anti-tank weapon, and the Volunteer Drone Factory manufactures do-it-yourself drones.³¹ According to a drone flight instructor from Aerorozvidka, there are now more than twenty drone schools in Ukraine, and the process of training is far more structured than it was at the start of the war.³²

There are also hundreds of small-scale drone production operations happening across Ukraine.³³ Many of these producers are unlicensed and operate informally to support the Ukrainian armed forces. While specific production numbers are unknown, both the Ukrainian govern­ment and Ukrainian drone NGOs have stated that, since the start of the 2022 Russian–Ukrainian War, Ukrainian drone production and Ukraine’s drone fleet size have both increased.

One reason why Ukrainians have begun to manufacture their own drones is that their assumption that DJI would remain neutral proved incorrect when Russia started “Special Operations.” This assumption was understandable, as both Russians and Ukrainians bought and used DJI drones in the Donbas prior to the 2022 invasion, with DJI not caring about the militarization of its drones at the time. Perhaps because the Donbas conflict was more of a frozen conflict than a hot conflict, and the number of drones bought was marginal, DJI did not feel a need to restrict the flow of drones to Ukraine.

Since the start of the war, however, a few problems have arisen with DJI products in Ukraine. One problem is the selective restriction of DJI equipment. For instance, DJI claimed that it restricted the usage of Aeroscope (drone detection software developed by DJI) for both sides. In practice, however, there have been ongoing reports of Russian forces using Aeroscope to detect Ukrainian drones and their users, with lethal results.

Another problem with Ukrainian use of DJI drones is that the Russians have been able to develop countermeasures to DJI drones that make them less effective.³⁴ As a result of these countermeasures, the range of DJI drones has declined as the war has progressed. DJI has also taken countermeasures against Ukrainian DJI users. For example, DJI has updated its drones so that it is more difficult to disable the firmware that constantly broadcasts the locations of DJI drones. DJI has also been targeting resellers that sell drones to Ukraine by capping the number of shipments of drones to such resellers.

In contrast, Russian forces have had an easier time buying DJI equipment. For example, there are many DJI drone resellers on Alibaba, a Chinese e-commerce company. Resellers on the platform are still able to sell drones to Russians.³⁵ It is also still possible for Russian users to buy DJI drones on AliExpress, another Chinese e-commerce company, with shipment records revealing that Chinese exporters have been ex­porting DJI drones to Russia.³⁶

At the same time, it is understandable why Ukrainians still use DJI drones and try to modify them instead of ceasing use entirely. Ukraine goes through about ten thousand drones a month; as the cheapest and still highest quality option on the market, DJI drones are the best source of replacements. The constant need for new drones has spurred the Ukrainian government’s interest in developing domestic drone capabilities. The government stated earlier this year that it is planning to spend over $550 million on drone technology.³⁷

For its part, the Chinese government has not stood idle while seeing commercial drones from DJI militarized. The CCP has concerns about the militarization of commercial drones, as Russia’s use of DJI drones makes it look like China is explicitly supporting Russia.³⁸ In light of this, in July of 2023, the Chinese government issued export restrictions on drone technology that took effect at the start of September. The goal of these restrictions is to minimize the export of commercial drones that end up being used for military purposes.

In brief, unlike in the United States, in Ukraine there are no explicit efforts to ban DJI, as DJI drones play a central role in the country’s war effort. But there is an effort to reduce dependence on DJI drones at the grassroots level, because while these drones are useful, the efforts of Russia, China, and DJI itself have reduced their efficacy for the Ukrainian military.

Improving Manufacturing Capabilities

Thankfully, the Pentagon is taking steps to improve America’s domestic drone manufacturing capabilities. In September 2023, the Pentagon announced the “Replicator” drone program that would be run by the DIU.³⁹ The latest NDAA has a provision that would grant the program $1 billion for investment in experimental technologies, primarily small drones. With the 2020 NDAA requiring the DoD to buy drones from non-covered countries, this money will likely spur the development of the American drone indus­try.⁴⁰

It is certainly encouraging that the Pentagon plans to buy more small commercial drones from American companies. The lack of enthusiasm from police and other agencies in the United States, however, demonstrates that drone replacement programs face limited support from many of the people and institutions they are supposed to benefit. In Ukraine, by contrast, concern about Chinese drones has come from troops on the ground dealing with cyber and supply-chain issues.

Unfortunately, Ukraine is also receiving a firsthand lesson in what happens when a hostile power controls a key technology. Challenges ranging from DJI’s restrictions on resellers, to firmware updates that make it harder for Ukrainian drone operators to disguise their location, to the emergence of improved Russian countermeasures, mean that this arms race may reach a point where it is no longer viable for Ukraine to deploy DJI drones.

There are two key lessons the United States can learn from Ukraine. First, the United States can observe the dangers of relying on a hostile country for supplies of critical technology. Second, we can learn from how rapidly all levels of Ukrainian society have adapted to the necessity of developing drones domestically. From grassroots efforts to large-scale government spending, Ukrainian society has become united on the issue of building its own drone fleet.

The federal government recognizes that it is not enough to just ban Chinese drones, but that money must flow to spur drone production. Beyond the “Replicator” program at the DoD, Congress should fund subsidies that would encourage agencies to buy commercial drones manufactured in the United States. A positive approach to fostering a native commercial drone industry is required to ensure that the United States has a secure supply of a technology product that is increasingly useful in peacetime and critical in wartime.

This article originally appeared in American Affairs Volume VII, Number 4 (Winter 2023): 42–51.

Notes