An Ohio-based pension fund has filed a lawsuit alleging that Amazon didn’t give due consideration to SpaceX as a potential launch provider for its Project Kuiper broadband internet satellite constellation, which is a rival for SpaceX’s Starlink satellite network.
The lawsuit, filed by the Cleveland Bakers and Teamsters Pension Fund in the Delaware Court of Chancery, says Amazon’s board of directors acted in bad faith last year when they chose three other providers — including Blue Origin, the space venture owned by Amazon founder Jeff Bezos — but left out SpaceX.
The other two companies were the European Arianespace consortium and United Launch Alliance, which will use Blue Origin’s BE-4 engine on its Vulcan Centaur rocket. The lawsuit says the three agreements add up to Amazon’s second-largest capital expenditure, after its $13.7 billion acquisition of Whole Foods in 2017.
So far, Amazon has spent nearly $1.7 billion on the launch deal, including $585 million paid out to Blue Origin directly, the lawsuit says.
In its filing, the CB&T Fund — which owns shares in Amazon — says that the company’s directors and officers, including the board of directors’ audit committee, made “no effort to properly discharge their fiduciary duties.” It suggests that Amazon’s decisions were unduly influenced by Bezos’ outside interest in Blue Origin.
The lawsuit tracks the tiffs that have arisen between Bezos and SpaceX CEO Elon Musk over the years, as well as the setbacks experienced during the development of Blue Origin’s New Glenn rocket and ULA’s Vulcan rocket.
The pension fund questioned whether the company would be able to make a federally mandated deadline to deploy half of its planned 3,236 satellites by mid-2026. It implied that the prospects would be better if Amazon had struck a deal with SpaceX, which it said “has by far the most proven launch track record in history.”
“In the face of SpaceX’s proven reliability and cost advantages, Bezos-led Amazon’s decision to not even consider SpaceX as a launch provider illustrates the glaring conflict of Bezos’ affiliation with both Amazon and Blue Origin presented, and the substantial impact these conflicts had on the board’s ability to protect the best interests of the company and its stockholders in negotiating the contracts,” the pension fund said in its suit.
The suit seeks unspecified damages, legal costs and “immediate disgorgement of all profits, benefits and other compensation obtained by defendants as a result of their breaches of fiduciary duties.”
In an emailed statement, an Amazon spokesperson said that “the claims in this lawsuit are completely without merit, and we look forward to showing that through the legal process.”
Despite the setbacks, Amazon has said that it remains on track to meet its satellite deployment schedule for Project Kuiper, which aims to make satellite access available to millions of people around the world, No satellites have yet been launched, however — in contrast with SpaceX, which has put thousands of Starlink satellites in orbit and claims more than 1.5 million subscribers.
Amazon is planning to have its first two prototype satellites launched by ULA’s Atlas V rocket as early as Sept. 26, and its satellite factory in Kirkland, Wash., is due to begin mass production by the end of this year. (For what it’s worth, SpaceX’s Starlink satellites are built at a facility nearby in Redmond.)
The fact that Bezos is the founder of Amazon as well as Blue Origin has long been seen as a point of potential conflict when it comes to Project Kuiper. It’s not clear whether Bezos took any special measures to distance himself from decisions about publicly traded Amazon’s involvement with privately owned Blue Origin, but those details may come out if the legal proceedings go forward.
The lawsuit suggests that SpaceX wasn’t even considered for the Kuiper launch contracts — but in the past, Amazon executives have referred to SpaceX as a potential choice. In 2020, for example, Amazon’s senior vice president for devices and services, Dave Limp, insisted that Project Kuiper was “launch-agnostic” and pointed to SpaceX’s methane-fueled Raptor engine as a “demonstration of breakthroughs.”
Last year, Limp sized up SpaceX’s launch offerings in more detail.
“I would say Falcon 9 is probably at the low end of the kind of capacity that we need,” he said during a Washington Post online chat. “As you think about them getting more Falcon Heavys, but more importantly, as they think about Starship and getting that into production readiness, those become very viable candidates for us as well.”
Full details: Space News has posted the publicly released version of the CB&T Fund lawsuit, with some redactions. Although information about the total value of Amazon’s launch contracts has been redacted from the filing, a report from CNBC noted Amazon’s disclosure that it expects to pay about $7.4 billion for satellite launch and related services through 2028, with $2.7 billion of that sum expected to go to Blue Origin.
