WSJ What’s News – How Drones Are Changing the Business of War

Date: October 5, 2025
Host: Alex Osola (B)
Guest: Alistair Macdonald, Ukraine and Defense Industry Reporter (C)

Episode Overview

This episode investigates the rapidly evolving role of drones in modern warfare, focusing on their transformation from hobbyist gadgets to key implements reshaping military tactics and the defense industry. Recent drone incursions across Europe and landmark deals between Ukraine and the U.S. frame an exploration of who makes drones, how they’re used, methods of defense, and the unprecedented business boom—and risks—surrounding drone technology.

Key Discussion Points & Insights

1. The Escalation and Evolution of Drone Warfare

• Drones’ omnipresence: Recently, drone sightings have led to airport closures in major European cities, and NATO is accelerating its anti-drone efforts ([00:18]).
• Drones have evolved beyond surveillance; now, they’re used for logistics, attacks (including "loitering munitions" that wait and strike), and swarming tactics ([02:20]).
• Quote: "It's a huge, now broad spectrum of drone usage. That's the big difference." — Alistair Macdonald ([02:56])

2. The New Capabilities: Scale and Cost

• Mass production as a game-changer: Ukraine produced 2 million drones in the past year, demonstrating a shift to cheap, high-volume production ([03:08]).
• The West lags behind in producing drones at comparable volume and price—a growing strategic concern ([03:08]).

3. Defending Against Drones: A Difficult and Expensive Challenge

• Defense against drones involves both traditional weaponry—like the German-made Gepard anti-aircraft guns—and more innovative tactics such as electronic warfare (signals jamming and spoofing) ([03:55]).
• Old equipment (even WWI-era machine guns) is repurposed alongside electronic countermeasures to bring down drones ([03:55]).
• Quote: "Some of their most effective anti-drone capabilities is something called the Gepard... just like these massive machine guns basically..." — Alistair Macdonald ([03:59])

4. Who Makes the Drones? The Emergence of New and Old Players

• Ukraine is now a leading innovator, especially in AI-powered drone swarms (company spotlight: Swarma) ([05:05]).
• U.S. produces high-end drones, e.g., the Reaper, and has new entrants like Anduril and AeroVironment, with major primes (Lockheed Martin, BAE Systems) entering the landscape ([05:22]).
• China dominates cheap, commercial-grade manufacturing—a backbone for global drone parts ([05:57]).
• Russia, after a late start, has caught up via domestic innovation and Iranian Shahed drones ([06:18]).
• Israel is an early innovator and producer of "loitering munitions" ([06:33]).
• The market is crowded and competitive, suggesting a future "Darwinian battle" amongst manufacturers ([07:08]).

5. The Shahed Drone: A Symbol of Cheap, Mass-Produced Warfare

• The Iranian-made Shahed is triangular, minimalistic, and designed for easy, rapid production. It’s widely copied or emulated globally ([07:22]).
• Strategic function: Used to waste enemy defenses and probe air defense systems before deploying more expensive munitions ([07:56]).
• Quote: "It's designed to be cheap and it's designed to be easy to make." — Alistair Macdonald ([07:25])

6. Why Is the West Lagging Behind?

• High production costs in Western countries make mass deployment of expendable drones economically unviable. Western drones can cost around a million dollars each ([09:14]).
• Quote: "It just costs a lot more to make things in the West...high-end drones for a million a shot. These are expendable weapons." — Alistair Macdonald ([09:16])
• The constant need to adapt drone tech due to advances in electronic warfare means development never stands still ([09:24]).

7. The Role of AI and Swarming Technology

• AI as an operational enabler: AI facilitates effective drone swarms, allowing them to coordinate tasks and compensate for losses or communication disruptions ([09:45]).
• AI is essential to resist electronic jamming; drones can continue missions autonomously if disconnected ([09:54]).
• Human-in-the-loop requirement in Western militaries means humans must authorize lethal action—even if drones coordinate themselves ([10:25]).
• Quote: "The idea of AI swarming technology is you don’t [need 40 people to control 40 drones]. They coordinate amongst themselves." — Alistair Macdonald ([10:19])

8. Drones and the Future of War

• Changing the battlefield: Drones bring precision and affordability together, combining capabilities that missiles (precision) and artillery (mass) previously provided separately ([11:04]).
• The Russian invasion of Ukraine is presented as a case study: despite conventional military power, Russia was thwarted by a nimble, drone-centric Ukrainian defense ([11:21]).
• Armor and vehicles are rarely seen on the front; they’re quickly targeted and destroyed by drones ([11:44]).
• The terrain matters: Ukraine’s open, flat landscape is ideal for drones; effects might differ in forested or maritime regions ([12:07]).
• Regardless of geography, drones are now an indispensable part of any military strategy ([12:20]).
• Quote: "Everybody knows drones are here to stay and that they will have this massive impact on the battlefield. There's nowhere to hide on a battlefield now." — Alistair Macdonald ([11:05])

Memorable Quotes & Moments

• On the new drone paradigm, Ukraine as innovator:
  "The Ukrainian industry produced 2 million drones last year and some of these are relatively cheaply produced." — Alistair Macdonald ([03:11])

• On defense difficulties:
  "They use ancient machine guns, some of which date back to the first World War..." ([04:09])

• On AI and Western ethics:
  "Western rules of engagement is that you always need a human being in the kill chain. It’s not like some sort of robot wars..." ([10:23])

• On the psychological and tactical impact:
  "You can be on or near the front line and you will see no armor...as soon as they show up, a drone will hit them." ([11:44])

Important Timestamps

• 00:18 — Introduction: Europe’s recent drone incursions and setting the stage
• 02:20 — Evolution and diversity of drone usage in Ukraine/Russia
• 03:08 — Mass production and cost revolution
• 03:55 — Anti-drone tactics and technological arms race
• 05:05 — Global drone manufacturers and the crowded market
• 07:22 — The Shahed drone as a battlefield staple
• 09:14 — Western struggle with cost and pace of development
• 09:45 — The critical emerging role of AI and swarming technology
• 11:04 — Drones’ transformative effects on tactics and military balance
• 12:20 — Why drones are indispensable to future conflicts

Conclusion

This episode offers an incisive look at how drones are transforming warfare and the defense industry—from the mass production lines in Ukraine, to the economic and ethical dilemmas in the West, to the indelible imprint made on the battlefields of Ukraine and beyond. As Alistair Macdonald makes clear, drones are now central to military strategy, innovation is accelerating, and the business—and threat—of drones will only grow from here.