Rocket engine maker Aerojet Rocketdyne reportedly has offered $2 billion in cash for United Launch Alliance, the government’s longtime favorite rocket builder. You know who probably isn’t at all happy to hear this? Jeff Bezos. You see, the Amazon CEO has a pet space company, Blue Origin, that could lose big money if the offer goes through.

Wait. What? How? Ah. Let us step into the world of rocket industry intrigue.

Reuters and the Wall Street Journal reported Tuesday night that Aerojet has been in serious talks about buying ULA. Aerojet is building an engine, called the AR-1, for ULA’s Atlas V rocket. But ULA also needs an engine for its upcoming Vulcan rocket, and even though the AR-1 will work, last year the company surprised pretty much everyone by asking Blue Origin to develop one too. Suddenly, Aerojet was competing with an upstart—and so far it seems Blue Origin has the edge.

So if you’re Aerojet and your project isn’t going well, how do you persuade a reluctant partner to stick with you? Bash it over the head with stacks of money until you own it. “I was shocked,” says space industry consultant Loren Thompson, “But I almost immediately saw logic of the transaction. It makes so much sense.”

Everyone involved in this space opera declined to comment. But it’s clear the deal could benefit ULA, which is no longer basking in its glory days of monopoly. ULA is a joint venture between Boeing and Lockheed Martin, which joined forces in 2005 to collaborate rather than compete against each other for government contracts. It has since had an amazing record, launching 90 satellites with barely any hiccups. (Its more famous payloads include NASA’s New Horizons and Curiosity, but government satellites are the bread and butter of the launch business.)

But two things threaten the Alliance’s dominance.

The first is Russia. The Atlas V relies on a Russian engine. Ever since Russia invaded Crimea last year, Congress has been pressuring ULA to use an American engine because, well, consider the irony of launching spy satellites with Russian engines. The next defense appropriations bill will phase out Russian engines within a few years. That’s why ULA asked both Aerojet and Blue Origin to develop rockets for the Vulcan.

The second is SpaceX, which, by the way, already has an American engine. In May, the Air Force certified SpaceX to launch military and spy satellites, ending United Launch Alliance’s monopoly. As the cost of ULA launches has mushroomed, the government sees SpaceX as a welcome competitor. This cuts into ULA’s bottom line just when it’s spending boatloads of money building a new rocket. “With SpaceX breathing down its neck, whether it’s going to make money is a question mark,” says Thompson. If Boeing and Lockheed want to get out of the satellite launch business, now’s a pretty good time.

Atlas V with MAVEN at Complex 41. Atlas V with MAVEN at Complex 41. NASA

Competition does not necessarily mean doom and gloom for ULA. At the NewSpace conference in July, Dennis Stone, who leads commercial space capabilities for NASA, noted a sea change among engineers at a recent visit to ULA. “They are so much more upbeat right now, so much more excited now, and freer than apparently they thought they were for many years to innovate. I said, ‘Why?’ They had a one word answer, ‘SpaceX.’ One even had two more words, “Thank you, SpaceX.”

If ULA sticks with Blue Origin’s unprecedented liquefied methane BE-4 engine, the innovations better keep coming. Methane is a liquid only when chilled to -285 degrees Fahrenheit, which requires overhauling fuel tanks and the ground infrastructure. (Blue Origin is developing the engine both for ULA and for its own rocket.) Aerojet’s AR-1 engine, in contrast, use the kerosene fuel that has been standard for decades.

ULA CEO Tory Bruno vowed to shake things up when he took over last year, and you might say the decision to partner with Blue Origin over Aerojet is a bit like your parents asserting their coolness by listening to dubstep. And he appears to be cranking it up. Yesterday, the two companies basically reiterated their partnership by issuing a curiously timed press release announcing expanded production capabilities for the BE-4. But even if the Aerojet deal goes through and Blue Origin gets shut out, it won’t hurt (much). The company still has the cushion that is Bezos’ vast personal fortune, after all. But it would slow things down by cutting into its revenue stream while also eliminating one hell of a place to do some R&D.

Competing for defense satellite launch contracts is a funny business complicated by national security. “It’s not truly a truly free market in terms of economics,” says Henry Hertzfeld, a space policy professor at George Washington University. If a commercial space industry truly gets off the ground, these defense contracts will no longer be the only lucrative game in town.

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Surprise $2B Bid Could Be Trouble for Bezos’ Space Company