ULA – Amazon’s Project Kuiper launch contracts to Blue Origin – An institutional investor is suing Amazon and its board of directors, including founder and CEO Jeff Bezos, over large launch contracts handed to Bezos’ space company, Blue Origin.
The lawsuit, filed by Amazon shareholders the Cleveland Bakers and Teamsters Pension Fund, claims that the board approved the launch arrangements for Amazon’s Project Kuiper mega-constellation in less than 40 minutes, without even considering the leading launch company (and Blue Origin rival) SpaceX.
The suit claims that“Amazon’s directors likely devoted barely an hour before blindly signing off on funneling […] Amazon’s money to Bezos’ unproven, struggling rocket company,” the suit says. The plaintiffs say the board failed to protect the negotiation process “from Bezos’ glaring conflict of interest.”
In early 2019, Amazon launched Project Kuiper, a satellite broadband endeavor; that same year, the corporation filed for a regulatory license to deploy a constellation of over 3,200 satellites into low Earth orbit, at a cost of several billion dollars.
According to the lawsuit, Amazon faced a “Herculean task”: authorities had given the corporation only 9 years to bring its whole constellation into orbit, thus the time was running on negotiating several dozen rocket launches, perhaps split over numerous suppliers.
When regulators authorized Amazon’s license to launch and operate its constellation in July 2020, Amazon management told the company’s Audit Committee that it was in talks with Blue Origin and three other launch providers for Project Kuiper launch contracts, according to the lawsuit. Arianespace, United Launch Alliance, and a third undisclosed business were the other launch providers.
However, it appears that SpaceX was never considered. The suit’s plaintiffs were perplexed that leading rocket manufacturer SpaceX was never considered: “Inexplicably, the most famous, reliable, and obvious launch provider in the world – SpaceX – was not among the four companies presented to [Amazon’s] Audit Committee.”
The actual value of the contracts is withheld from the public version of the case, but the plaintiffs claim that the launch contracts represent “the second-largest capital expenditure in Amazon’s 25+ year history.” The company’s first-largest acquisition was Whole Foods for $13.7 billion. According to the lawsuit, Blue Origin received over 45% of the total contract value.
So far, Amazon has spent over $1.7 billion on launch contracts, with Blue Origin receiving $585 million.
The legal brief also mentions the ongoing rivalry between Blue Origin and SpaceX, which has seen both businesses bid for the same contracts, with negative consequences for Blue, as well as personal animosities between Musk and Bezos.
The lawsuit was filed earlier this week in Delaware’s Court of Chancery. The Delaware Business Court Insider was the first to break the story.