Frontier-technology markets are too narrow — here’s how to widen them

Public funding not only supports frontier technologies, but it also shapes the markets that emerge from them. Governments have a significant influence on which firms gain an early lead, which systems become widely accepted, and ultimately, whether markets remain open or become dominated by a select few.

Governments must acknowledge their role in shaping the future competition within frontier technology sectors. When possible, they should choose options that widen these markets instead of creating exclusive gateways controlled by a handful of private firms. Concentration is already apparent in certain areas like space, artificial intelligence, and quantum technologies.

When governments decide on contracts, grants, benchmarks, infrastructure, and purchasing routes, they influence which companies learn first, which systems gain adoption, and whether markets stay competitive. The central principle to remember is contestability: public support should reward performance in the present without denying later suppliers the opportunities to offer superior solutions and compete on their own merits.

The space sector provides a clear example of how market constraints can arise. Governments are major customers for space services, and their procurement decisions determine which firms gain experience, build capabilities, and attract future investments. The actual mission launches generate valuable data about what works, giving suppliers an edge when they are chosen again.

For instance, SpaceX, based near Brownsville, Texas, conducted 83% of the total licensed launches by the U.S. Federal Aviation Administration (FAA) in fiscal year 2024. In April 2025, SpaceX secured seven out of the nine national-security launch missions from the U.S. government budget, amounting to a total of US$846 million. The remaining two missions were awarded to another established provider at a total cost of $428 million.

In cloud computing, artificial intelligence, and quantum technologies, a supplier's advantage may stem from the routines formed when government agencies learn one particular way to purchase, secure, and use systems. Similarly, in quantum technologies, publicly funded testing facilities can create an aura of credibility around certain approaches, potentially making them less accessible to competitors.

The concern is whether today's choices make tomorrow's alternatives too expensive or impractical to adopt. For public buyers, switching tools could require moving data or rebuilding interfaces. For firms, entering a market might depend on gaining access to technical data or infrastructure that is already held by established players.

In the space sector, NASA estimated that incorporating a new supplier for key components of its Space Launch System could cost over US$4.5 billion and delay the launch by ten years. This is because existing contractors possess crucial technical data needed for the project.

Additionally, when only a few suppliers dominate satellite services, which are used for positioning, navigation, timing, communications, environmental monitoring, and defense, a cyberattack, production stoppage, or other disruption at one firm can impact multiple missions simultaneously. Limited alternative providers also weaken governments' bargaining power and reduce competitive pressure on price, quality, and innovation.

To prevent these bottlenecks, governments need to implement safeguards before early advantages solidify into barriers to entry. Public agencies should consider what a later supplier would require to gain access, connect to the system, undergo assessment, or replace the established supplier. The feasibility of these channels determines future contestability.

Some government programs do take steps to prevent the market from becoming closed off. For example, NASA's Commercial Lunar Payload Services program buys delivery services from multiple commercial providers. This approach allows NASA to distribute payload risk and knowledge across various lunar delivery service providers, ensuring that early failures don't lead to a final verdict for a single supplier.

However, these safeguards are not evenly distributed. NASA's 2024 audit found that five out of eight task orders had issues related to access for new suppliers. To address this, governments should adopt measures such as contracting multiple firms, conducting staged assessments to allow new entrants to join later, creating open interfaces that aren't tied to a single vendor, and maintaining routes for new suppliers to enter the market.

Overall, by adopting these safeguards, governments can ensure that their support for frontier technologies fosters a competitive and open market, promoting innovation and preventing the emergence of monopolistic structures.