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Go read this Businessweek story about the downsides of DJI’s drone dominance

Go read this Businessweek story about the downsides of DJI’s drone dominance


The company is synonymous with drones, which may be a problem

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Photo by Vjeran Pavic / The Verge

If you’ve bought, flown, seen, or even thought about a drone over the last five years, it was likely one of DJI’s quadcopters. In fact, the Chinese company has so thoroughly consumed both the consumer and commercial drone markets that its dominance is now hitting a point of limited — and possibly even negative — returns, according to a new feature from Bloomberg Businessweek.

The piece is part reflective examination of how DJI got here, part investigation into reclusive founder and CEO Frank Wang’s management style, and part appraisal of the impact that the trade war and the recent Huawei controversies has had on the company. But more than anything, it’s about how DJI has put itself in a position where it’s become its own primary competition. To wit:

[...] the company’s tireless drive to improve its products and lower prices has sucked so much of the profit out of the market for consumer and corporate drones that even Wang has little choice but to fund expansions into cameras, robotics, and, most controversially, drones sometimes used for surveillance by big companies and government bodies. As one former employee puts it, “Frank has created a race to the bottom, and now he’s competing against himself.”

Blake Schmidt and Ashlee Vance, who reported the piece, explain that DJI’s relentless product cycle and aggressive pricing have made it harder for the company to pull in a profit than one might assume. They also dug into some of the relentless tactics that DJI employed as it carved out that dominance, which reportedly included filling an online forum with negative comments from fake accounts about EHang, another Chinese company that’s working on passenger drones, and trolling YouTube videos about quadcopter company Yuneec.

And while working with governments at the local and national level may have presented a new path to revenue, it has also led the company down some dark paths.

The reporters discovered DJI announced in 2017 that it agreed to provide drones to authorities in charge of the city of Xinjiang, where 1 million Uighurs are being held in various levels of captivity and subjected to “re-education” by the Communist Party of China (CCP).

They were also told that DJI’s air traffic control-style tracking technology may have sprouted from an interaction with the CCP:

While it’s not recommended—or, in most places, legal—it’s technically possible to fly DJI’s drones as high as 4 miles into the sky. Someone in China was doing exactly that—and the drone almost collided with a People’s Liberation Army Air Force fighter jet, according to two people familiar with the 2016 incident, who spoke on condition of anonymity because they weren’t authorized to discuss it. The fighter pilot landed and was furious. He asked to check footage from a camera mounted to the plane to see if it caught images of the device, which it had. The military brought the pictures to DJI and demanded to know whose drone it was. DJI said it didn’t have a database with that sort of specific information and could provide only a general idea of devices near that location, according to one of the people familiar with the matter.

The government insisted that DJI create a type of air-traffic-control database that can identify and monitor drones flying in China. While Wang, according to former employees, isn’t a big fan of the military, he created this system rather than have the government try to build it, one of the people says.

DJI either denied or declined to comment on many of the claims in the story. But the parts of the report that detail the company’s alleged relationship with the Chinese government are unlikely to allay the fears of those in the US government who had some federal agencies stop using DJI’s drones over security concerns.

Either way, Schmidt and Vance’s new feature is sure to scratch off some of the sheen of DJI’s market dominance. Go check it out.