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More than three-quarters of the U.S. government’s satellite images don’t come from government satellites. They’re provided by two companies, GeoEye and DigitalGlobe. So alarms began to ring in Washington in February, when those two companies started talk to become one, forming a monopoly in space and radically altering the economics of the commercial satellite industry and how we see the Earth from above.

Months of friendly merger talks were sparked by fears of military budget cuts that made both companies think of joining forces to avoid huge losses. On May 6 DigitalGlobe turned down a surprise $792 million hostile takeover bid from GeoEye. But talks continued … until now, it seems. According to an industry official familiar with the negotiations, the chances of the two companies combining are growing slim, in large part because key congressional panels won’t allow the satellite budget to get cut. “It appears that Congress is being receptive to the importance of having two companies in space,” the official tells Danger Room.