A shareholder of Amazon, the e-commerce giant, has initiated a lawsuit against the company’s founder, Jeff Bezos, and its board, alleging that the directors failed to adequately evaluate the decision to award launch contracts for Amazon’s Project Kuiper satellite venture to Blue Origin, which is Bezos’s space company.
The lawsuit was filed earlier this week by the Cleveland Bakers and Teamsters Pension Fund.
It contends that the Amazon board approved contracts worth billions of dollars to Blue Origin without considering SpaceX, owned by rival Elon Musk, as an alternative launch provider, despite SpaceX’s established track record in the space industry.
Amazon shareholder files lawsuit over project Kuiper launch contracts
Amazon’s Project Kuiper aims to create a network of over 3,000 satellites to deliver broadband internet to remote areas, putting it in direct competition with Musk’s Starlink project.
Amazon responded to the lawsuit, calling the claims “completely without merit” and expressing confidence in their position during the legal process.
The lawsuit emphasizes that the launch contracts represented one of the largest capital expenditures in Amazon’s history at the time.
Amazon has already paid approximately $1.7 billion to the three launch providers involved in the Project Kuiper initiative, including a direct payment of $585 million to Blue Origin.
However, the company has not yet launched a prototype of the Kuiper satellite into orbit.
Project Kuiper intends to begin mass-producing the satellites later in the year and commence beta testing with commercial customers in 2024.
This deployment schedule aligns with the Federal Communications Commission (FCC) regulatory requirement for Amazon to launch half of its entire Kuiper satellite network, consisting of 3,236 satellites, by 2026.
The pension fund’s lawsuit seeks unspecified damages and legal fees and was filed in the Delaware Court of Chancery on August 28th.