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They're not cloud based as far as I would define it. I have one and fly mostly on areas where there is no internet signal. The drone beams back video to your phone and unless you're syncing the cache videos with their cloud nothing its stored other than flight meta data. You can avoid even that by using a totally offline controller/phone.

How does the drone communicate with the phone?

Via the remote over RF.

with how they are executing tick tock and making a mockery out of the USDS system, I would not put this past them at all

> I accept that chinese authorities generally have access to anything they want to in the country

So just like the US ?

nope. the US doesn't have the same military-civilian fusion that China has, given the latter is an authoritarian one party state.