An institutional investor has sued Amazon and its board of directors, including founder and CEO Jeff Bezos, over the massive launch contracts it awarded to Bezos’ space company, Blue Origin.
The lawsuit, brought by Amazon shareholders the Cleveland Bakers and Teamsters Retirement Fund, alleges that the board spent less than 40 minutes approving launch agreements for Amazon’s massive Project Kuiper constellation, while not even considering leading launch company (and Blue Origin competitor) Space. X. .
“Amazon managers likely only set aside an hour before blindly signing off on the transfer […] The lawsuit says Amazon’s money for Bezos’ rocket company is unproven and in default. Prosecutors say the board failed to protect the negotiation process “from Bezos’ blatant conflicts of interest.”
Amazon announced its satellite broadband initiative Project Kuiper in early 2019; In the same year, the company applied for a regulatory license to deploy a constellation of more than 3,200 satellites in low Earth orbit, at an expected cost of several billion dollars.
As the lawsuit notes, Amazon had a “daunting task” ahead of it: Regulators had given the company just nine years to get its entire lineup into orbit, so the clock was ticking to negotiate the launch of dozens of rockets, likely spread across multiple providers.
When regulators approved Amazon’s license to launch and operate its cluster in July 2020, Amazon’s management informed Amazon’s audit committee that the company was in talks with Blue Origin and three other launch providers for Project Kuiper launch contracts, the suit says. Other launch providers were Arianespace, United Launch Alliance and a third, unnamed company.
But SpaceX never seemed to be raised as a possibility. The plaintiffs in the lawsuit expressed their bewilderment that leading rocket company SpaceX was not in the running at all: “Inexplicably, the most well-known, reliable and visible launch provider in the world — SpaceX — was not among the four companies brought to court.” [Amazon’s] The Audit Committee.”
Instead, Amazon chose European company Arianespace, along with Blue Origin and United Launch Alliance, whose Vulcan Centaur rocket is powered by BE-4 engines made at Blue Origin.
While the exact value of the contracts was omitted from the public version of the lawsuit, plaintiffs state that the launch contracts across all providers represent “the second largest capital expenditure in Amazon’s 25-plus year history.” The first is the company’s acquisition of Whole Foods for $13.7 billion. According to the lawsuit, approximately 45% of the total contract value went to Blue Origin.
So far, Amazon has spent about $1.7 billion on launch contracts, with $585 million of that going to Blue Origin.
The legal filing also points to the ongoing rivalry between Blue Origin and SpaceX — which has seen both companies bid for the same contracts, with results not in Blue’s favor — as well as feuds between Musk and Bezos personally.
The lawsuit was filed in a Delaware court earlier this week. The Delaware Business Court Insider was first to report.