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For years, concerns about ticking off wireless carriers have forced Apple executives to scale back plans to keep iPhones connected through satellites. Now Apple’s space efforts have a new problem: Elon Musk.

Three years ago, Elon Musk approached Apple with an eleventh-hour offer.

Musk had heard that Apple was about to announce a feature for the upcoming iPhone 14 in partnership with satellite firm Globalstar that would allow iPhones to send text messages to emergency services in areas without cellular reception. He wanted Apple to instead use satellite internet service from Starlink, a Globalstar rival operated by Musk’s rocket company, SpaceX.

His pitch: SpaceX would agree to exclusively provide satellite connectivity to iPhones for 18 months if Apple would pay it $5 billion up front, according to two people with direct knowledge of the deal. After that period of exclusivity ended, Musk proposed that Apple pay SpaceX $1 billion a year for Starlink service, the people said. Furthermore, if Apple couldn’t come to terms with SpaceX, Musk threatened to announce a similar satellite feature on his own that could work with iPhones, the people added. He gave Apple 72 hours to decide.

The Takeaway

• In 2022, Musk made an offer to Apple to provide satellite connectivity to iPhones via Starlink

• He proposed Apple pay SpaceX $5 billion for an 18-month exclusive deal

•Apple’s Project Eagle was an early plan with Boeing to offer full mobile and home internet service via satellite

Apple rejected the offer from Musk, who later made good on his threat. Two weeks before the iPhone 14 was announced, SpaceX in August 2022 announced a partnership with phone carrier T-Mobile, which allowed smartphone users to send and receive text messages in areas with no reception using Starlink.

The failed deal added tension to Apple’s relationship with Musk, who has spent the ensuing years tangling with the iPhone maker on a range of issues, including the burden its App Store fees put on his X social media service. Musk has even flirted with making his own phone to reduce his dependence on Apple.

The headbutting is especially intense over the issue of satellite internet service, which by some estimates represents the most lucrative part of SpaceX’s business and the majority of its $350 billion valuation. SpaceX has filed legal challenges to Globalstar’s use of the radio spectrum it has licensed, which could cripple the iPhone’s satellite service if successful.

“In this space, SpaceX only thinks about Apple as a serious competitor and Apple only thinks about SpaceX as a serious competitor,” said Tim Farrar, president at satellite consulting firm Telecom, Media & Finance Associates.

For Apple, satellite internet service is still a sideshow to its gargantuan iPhone business, which accounted for 51% of the company’s $391 billion in revenues last year. However, keeping iPhones connected when cellular networks aren’t available could become an increasingly important part of the value of smartphones. Apple’s satellite features are now available in 17 countries and have expanded beyond emergency texting to include location sharing and messages to personal contacts and roadside assistance.

But those efforts have been divisive even inside Apple itself. The satellite project as a whole has faced growing skepticism from Apple executives who worry the company is moving too far into the realm of becoming a telecommunications carrier, which could expose it to additional regulation. Also, Apple counts on mobile carriers to push sales of its latest iPhones. These carriers, who strike their own partnerships with satellite providers, could view Apple’s project as their competition.

In a statement, an Apple spokesperson said: “When no carrier network is available, Apple offers its own satellite services focused on emergency services—like messaging, emergency assistance, roadside help, and location sharing—which have already helped save lives. Our features have been designed to complement carrier offerings, giving users an added safety net when carrier service is unavailable.”

SpaceX didn’t respond to a request for comment.

Project Eagle

Apple’s original space ambitions were vast.

Starting in 2015, Apple and Boeing held early discussions about a satellite internet project that would involve delivering full-blown wireless internet service, not just emergency communications services, to iPhones and homes, said five people involved in or briefed on the project.

Through the effort, dubbed Project Eagle within Apple, the companies would lob thousands of Boeing satellites into orbit to beam internet down to iPhones. For home users, Apple planned to offer antennas people could stick to their windows to disperse their internet connection throughout the building. (Satellite internet requires a device to have an uninterrupted line of sight to the sky.)

For the project’s champions, it was an ambitious gambit to provide a more seamless Apple experience. Some inside Apple saw mobile carriers as necessary but inconvenient partners that held the company’s iPhone plans back. With a global satellite system, Apple could provide more of the key ingredients for its products, reducing its dependency on outside partners.

The lead executive and architect behind the project was Apple’s longtime wireless chief, Rubén Caballero. Apple spent around $36 million testing out the concept at a secret location in El Segundo, Calif., the people with knowledge of the project said. The team aimed to launch the service in 2019.

But eventually Apple got cold feet. Tim Cook, Apple’s CEO, was concerned that the project would jeopardize the company’s relationship with the telecom industry, said people with direct knowledge of the project. It was also an expensive undertaking with an unclear near-term business case. At the end of 2016, Apple canceled the project. (Caballero left the company in 2019.)

Still, Apple’s satellite dreams didn’t die with Project Eagle.

Apple’s former hardware engineering chief, Dan Riccio, formed a group that began looking at new wireless opportunities the company could go after to differentiate its products.

The effort was consistent with other moves Apple was taking at the time to control more of the wireless technologies that connected its products to the internet. The company was locked in a bitter courtroom brawl with Qualcomm over the fees the wireless chipmaker was demanding for its patents, prompting Apple to start developing its own wireless modem chips.

In 2018, Apple had casual conversations with satellite internet provider OneWeb and other satellite internet providers about investing in them to deliver home internet service from satellites, said people with direct knowledge of the talks. OneWeb told Apple such a service would cost between $30 billion and $40 billion to deploy, one of the people said.

But the conversations between Apple and OneWeb quickly fizzled. OneWeb was struggling financially (in 2020, the company filed for bankruptcy after it failed to raise enough money). And eventually the Apple skunkworks team came to a conclusion similar to the one their colleagues working on Project Eagle had reached a couple years earlier: Apple shouldn’t get into the home internet business.

Differentiating from Android

Next, the group came up with a focus that seemed to present less potential for conflict with its existing carrier relationships: figuring out how to deliver satellite communications to iPhones only in remote areas that weren’t already served by terrestrial cellular networks.

The team looked at partnering with satellite providers such as EchoStar, but deals with those companies were too expensive for Apple, said people with direct knowledge of the talks.

Apple’s head of corporate development, Adrian Perica, encouraged the team to work with SpaceX as its satellite provider, said people who worked on the project. Perica had dealings with Musk that stretched back over a decade, to when Apple looked into acquiring Tesla. The two had maintained a relationship since then, keeping in touch via text messages, said the people.

But ultimately, Apple ended up cutting a deal with Globalstar. Apple was able to get a good deal, as the satellite provider was facing financial difficulties at the time, said people who worked on the deal.

In 2022, Apple announced a $450 million investment in U.S. infrastructure, with the bulk of the funding allocated to Globalstar to support its satellite network and ground station operations. In 2024, Apple committed an additional $1.7 billion to Globalstar, including $1.1 billion for the construction and launch of new satellites.

Within a team at Apple that deals with government regulators, the structure of the Globalstar deal caused some hand-wringing. At one point, Apple owned some of the equipment, including servers and antennas in Globalstar’s ground stations. Apple’s regulatory advisers recommended having Globalstar take ownership of it to avoid running afoul of telecommunications rules, one person with direct knowledge of the matter said.

When Apple launched the emergency satellite texting feature in 2022, it turned out to be the standout feature for that generation of iPhones, distinguishing the devices from rival Android ones.

The satellite team hoped to make an even bigger bet on satellites. In 2023, the team began pushing Apple leaders to use a new generation of satellites to deliver unrestricted internet service to phones in remote locations, including applications like streaming music and video, said people with direct knowledge of the project. It would have been much more expensive than Globalstar’s existing service for Apple, consisting of a couple hundred satellites rather than Globalstar’s current constellation of several dozen.

But once again Apple backed away from those plans out of concerns that such a move would anger mobile carriers. Instead, the company decided to limit its satellite offering mostly to messaging and potentially less data-intensive applications like accessing maps.

Rival Musk

After Apple spurned Musk’s offer of a Starlink deal in 2022, SpaceX began a campaign to make life harder for Apple in the satellite business. SpaceX filed multiple challenges to the valuable wireless spectrum rights licensed to Globalstar in filings to the Federal Communications Commission.

In one of those filings in 2023, SpaceX’s vice president of satellite policy, David Goldman, objected to Globalstar’s application to launch new satellites, accusing the satellite company of barely using the spectrum it already controlled. Goldman accused the company of trying to lock out rivals by hogging spectrum for itself.

“This shell game serves one purpose: to block competitive entry in frequencies Globalstar has never meaningfully used,” Goldman wrote.

SpaceX also named Apple in the regulatory filings, vexing Apple executives who wanted to keep their distance from the spat between SpaceX and Globalstar, said people with direct knowledge of the matter.

After SpaceX name-checked it in the filing, Apple executives ramped up their attention to the spectrum issue. Earlier this year, Apple hired Whitney Lohmeyer, former chief technologist of the Space Bureau at the FCC, to deal with the flurry of regulatory filings with the agency, said people with direct knowledge of her hire. Apple employees believe Musk’s close relationship with Trump could give him an advantage over Apple and others with the FCC.

More recently, Apple and SpaceX have clashed over how much Apple would support SpaceX’s partnership with T-Mobile. Over the past year, Musk asked Apple to support the T-Mobile satellite feature in a broad range of its iPhone models, which will help maximize the potential market for the service, said people involved in the project.

But Apple was reluctant to support the service in models older than the iPhone 14, which frustrated Musk, said people with direct knowledge of the relationship. Apple’s stance could provide an incentive for its customers to upgrade their phones to newer models. The launch of SpaceX’s offering to T-Mobile customers, currently available in a beta version and due to fully launch in July, could also undercut Apple’s service with Globalstar since iPhones on T-Mobile’s network will default to the Starlink service.

In recent years, Musk has also plotted the ultimate challenge to Apple, said a person with direct knowledge of his thinking: building his own phone to get around Apple’s gatekeeper position in the market. Musk has discussed Tesla building the phone and providing satellite connectivity through Starlink, the person said.

Musk hasn’t kept his openness to making a smartphone secret. He has publicly toyed with the idea on social media at times, but he has also made it clear he doesn’t want to deal with the headaches of such a monumental effort.

“The idea of making a phone makes me want to die,” Musk said at a Trump rally in Philadelphia last October. “If we have to make a phone, we will. But we will aspire not to make a phone.”

Internal Doubts

Some employees and senior executives at Apple have questioned the long-term viability of the iPhone’s satellite service.

Former Apple employees who have worked on the project say the network Globalstar is operating for Apple is already outdated, slow and limited in what features it can support compared with offerings from SpaceX and others. And the satellites Globalstar plans to launch for Apple in the coming years, which won’t significantly upgrade that network, are expected to stay in place through the next decade, they say.

Apple has yet to begin charging users for satellite features and has extended the free access period through at least September of this year.

One reason Apple executives have been reluctant to charge customers for the features is their fear that it could trigger the U.S. government to regulate Apple as a telecommunications carrier, said people who worked on the project. That could force Apple to build back doors into communication services like iMessage. Federal law requires telecommunication carriers to allow for surveillance to comply with government information requests.

One person who worked on Apple’s satellite network estimated that the company is spending hundreds of millions of dollars annually on the service. That includes payments to Globalstar, equipment costs to run the network and salaries for engineers.

Other top Apple executives, including software chief Craig Federighi, have at times advocated that the project should be killed off. Those skeptics argue that customers are more likely to sign up for satellite features through their mobile carriers, rendering Apple’s offering unnecessary.

Perica, who initially advocated for a partnership with SpaceX, is now among those Apple executives who are dismissive of the satellite project. According to a person who has heard his remarks, Perica has raised the question inside Apple of why the company should invest in the effort if Musk is going to do it anyway.