The German government has made the decision to prohibit a Chinese firm from taking full control of satellite startup KLEO Connect, according to a senior government source. Shanghai Spacecom Satellite Technology, which currently holds a majority stake of 53% in KLEO Connect, had planned to acquire the remaining 45% minority stake from the German company EightyLeo.

KLEO Connect’s goal is to establish a global network of more than 300 small, low earth orbit satellites by 2028. This would be accompanied by the development of ground infrastructure to enable the provision of global communications services, similar to SpaceX and its Starlink project. The space industry is becoming increasingly crucial, as highlighted by the recent debate on the potential use of Starlink by Ukraine’s military to defend against Russia’s invasion.

Elon Musk, CEO of SpaceX, recently revealed that he had rejected a Ukrainian request to activate the Starlink satellite network in Crimea’s Sevastopol. Musk expressed concerns about being involved in a significant act of war. Germany has been taking a tougher stance on China over the past year, with Chancellor Olaf Scholz’s government emphasizing the need to reduce strategic dependencies on the Asian superpower.