The database company’s Defense Ecosystem reveals Silicon Valley’s playbook for extracting value from national security spending
The Story
Oracle has unveiled the second cohort of its Defense Ecosystem, adding 10 companies to a program launched in June 2025 that positions the database giant as gatekeeper for defense technology innovation across the United States and allied nations. The new members—including Airis Labs, Defence Unicorns, Duality Technologies, and Reka—join existing participants specializing in AI-powered situational awareness, autonomous systems, secure communications, and advanced analytics.
The ecosystem structure proves instructive. Oracle provides participating companies with preferred cloud pricing, technical support, access to its Cloud Marketplace serving hundreds of thousands of customers, and guidance navigating complex defense procurement requirements including Cybersecurity Maturity Model Certification (CMMC) and Secure Cloud Computing Architecture (SCCA) compliance. In exchange, these firms build solutions exclusively or primarily on Oracle Cloud Infrastructure (OCI), effectively locking their defense customers into Oracle’s platform.
Strategic partnerships amplify Oracle’s positioning. The company has secured collaborations with Anduril Industries to deploy its Lattice command-and-control platform, Palantir for AI-powered data analytics, Defence Holdings PLC for UK sovereign AI solutions, and RAFAEL Advanced Defense Systems for multidomain combat applications. These arrangements transform Oracle from mere infrastructure provider into essential defense technology intermediary—a position that generates recurring revenue while creating switching costs that insulate the company from competitive pressure.
The Context
Oracle’s defense strategy arrives amid explosive growth in military technology spending. The United States Department of Defense budget exceeds $800 billion annually, with technology modernization commanding increasing share as military doctrine emphasizes AI-enabled warfare, cyber resilience, and real-time data fusion. Allied nations collectively spend hundreds of billions more, creating addressable market that dwarfs commercial cloud opportunities in mature sectors.
The company’s positioning exploits structural inefficiencies in defense procurement. Emerging technology companies—precisely those developing cutting-edge AI, autonomous systems, and analytics capabilities that military organizations seek—typically lack resources, relationships, and compliance expertise necessary to penetrate Defense Industrial Base. Oracle’s ecosystem ostensibly addresses these barriers by providing startups with enterprise sales support, regulatory guidance, and access to established procurement channels.
Yet this intermediation creates dependency relationships that benefit Oracle disproportionately. Once defense agencies deploy solutions built on OCI, migration costs effectively lock them into Oracle’s platform regardless of whether competitive alternatives offer superior capabilities or economics. This dynamic proves particularly valuable in defense contexts where security classifications, air-gapped networks, and stringent compliance requirements make platform switches prohibitively complex.
The competitive landscape reveals interesting positioning strategies among hyperscalers. While Amazon Web Services dominates commercial cloud markets and has secured substantial defense contracts including the $10 billion Joint Warfighting Cloud Capability (JWCC), Oracle differentiates through sovereign cloud offerings that address data residency requirements across allied nations. The company operates cloud regions in 25+ countries with FedRAMP High, DISA IL5, Secret/Top Secret classifications—capabilities that AWS and Microsoft Azure cannot fully replicate across all geographies.
The Intelligence
For venture capitalists evaluating defense technology investments, Oracle’s ecosystem reveals how platform dependencies shape exit opportunities and valuations. Companies building primarily on proprietary cloud infrastructure face acquisition constraints, as buyers must either maintain existing platform relationships or undertake costly migration projects. This dynamic may depress acquisition multiples compared to platform-agnostic solutions that offer buyers greater flexibility.
The ecosystem membership criteria deserve scrutiny. While Oracle claims to support innovation democratization, the program effectively channels defense technology development onto its platform rather than enabling genuine multi-cloud architectures. This creates moral hazard where Oracle’s commercial interests potentially conflict with national security optimization—the company benefits from ecosystem growth regardless of whether participating solutions represent best-in-class capabilities.
For founders building defense technology companies, Oracle’s program illustrates the platform capture strategies that hyperscalers employ to extract value from specialized vertical markets. The preferred pricing, technical support, and sales assistance appear generous initially but create dependencies that may constrain strategic options subsequently. Companies accepting Oracle ecosystem membership effectively outsource go-to-market strategy to a vendor with conflicting interests.
The sovereign cloud angle proves particularly instructive. As allied nations increasingly demand that defense data remain within national borders—requirements driven by legitimate security concerns and protectionist industrial policy—cloud providers capable of delivering localized infrastructure capture regulatory moats. Oracle’s investment in distributed sovereign cloud regions across NATO allies positions the company advantageously as data residency requirements proliferate.
The Palantir partnership merits attention. By integrating Palantir’s Foundry and AI Platform across OCI government clouds, Oracle creates compelling bundled offerings that combine infrastructure, data management, and analytics capabilities. This partnership strategy—bringing established defense contractors onto Oracle’s platform—validates OCI for security-conscious agencies while generating platform adoption that benefits both parties at competitors’ expense.
The Bridge
For VCs Reading This: “If you’re evaluating defense tech investments, consider three strategic alternatives to ecosystem dependency:
- Build platform-agnostic from inception—multi-cloud architectures preserve strategic optionality and command premium acquisition multiples from buyers seeking flexibility
- Target direct government contracts over ecosystem partnerships—companies securing Prime contracts independently capture more value than those relying on platform providers for distribution
- Focus on edge computing rather than cloud-dependent solutions—tactical military applications increasingly require disconnected operations where cloud dependencies create operational vulnerabilities”
Defense Tech Investors Active in Platform-Independent Solutions: “- Shield Capital – $186 million fund focused on dual-use technologies, specifically seeks companies building across multiple cloud platforms to avoid vendor lock-in
- Andreessen Horowitz – American Dynamism practice targeting defense innovation, prefers companies with direct Pentagon relationships over ecosystem-dependent startups
- Innovation Endeavors – Eric Schmidt-backed fund with $500 million under management, emphasizes operational technology over cloud-native solutions vulnerable to platform capture”
For Founders Reading This: “Key takeaways for building defensible defense technology companies:
- Maintain multi-cloud architecture from day one—Oracle ecosystem membership creates dependencies that depress valuations and limit strategic options during exit negotiations
- Secure independent Pentagon relationships before joining ecosystems—direct customer relationships provide negotiating leverage with platform providers seeking your solutions
- Build for tactical edge rather than data center dependence—disconnected operations capability proves increasingly valuable as near-peer conflicts emphasize contested communication environments
- Consider open-source infrastructure over proprietary platforms—Kubernetes, Apache frameworks, and open-source AI tools provide deployment flexibility that proprietary clouds cannot match
- Negotiate ecosystem terms explicitly—preferred pricing and support create implicit obligations; formalize expectations around exclusivity, data ownership, and exit rights before committing”
Oracle’s Defense Ecosystem illustrates how hyperscalers extract value from specialized vertical markets through platform capture strategies disguised as innovation enablement. While the program ostensibly democratizes defense technology access, its fundamental structure channels solutions onto Oracle infrastructure in ways that benefit the platform provider disproportionately. As defense budgets increasingly flow toward technology modernization, founders and investors must recognize that ecosystem membership represents strategic trade-offs between near-term go-to-market acceleration and long-term value capture—with platform providers positioned to extract rents from innovations they neither developed nor funded.
