Elon Musk, founding father of SpaceX, left, and Amazon and Blue Origin founder Jeff Bezos.
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An Amazon shareholder lawsuit says the corporate snubbed SpaceX for beneficial satellite launch contracts due to Jeff Bezos’ personal rivalry with Elon Musk, who has taunted his fellow billionaire’s space ambitions for years.
Cleveland Bakers and Teamsters Pension Fund, or CB&T, filed a shareholder grievance on behalf of Amazon within the Delaware Court of Chancery on Monday.
The pension fund’s lawsuit centers around Amazon’s blockbuster purchase of rocket launches for its Project Kuiper satellite web system. The suit emphasizes the rivalry between Bezos and Musk, featuring screenshots of the SpaceX and Tesla chief’s social media taunts concerning the Amazon founder’s space efforts on the e-commerce giant and his space company, Blue Origin.
Last yr, Amazon announced what it called the most important rocket deal within the industrial space industry’s history, signing launch contracts with United Launch Alliance (ULA), Arianespace, and Bezos’ Blue Origin. In its May annual shareholders meeting, Amazon disclosed it expects to pay about $7.4 billion for launch services through 2028, with $2.7 billion expected to go to Bezos’ wholly owned Blue Origin.
CB&T alleges that Bezos, Amazon’s executive chair – in addition to CEO Andy Jassy and members of the corporate’s board of directors who also serve on its audit committee – “consciously and intentionally breached their most simple fiduciary responsibilities” by awarding contracts for Kuiper missions on a trio or rockets which have yet to launch and are years behind schedule.
The lawsuit adds that Amazon leadership “excluded essentially the most obvious and reasonably priced launch provider, SpaceX, from its procurement process due to Bezos’ personal rivalry with Musk.”
SpaceX is the leading rocket provider on this planet, with its Falcon 9 rockets advertised at a relatively low market price of about $70 million per launch. In 2023, the corporate is flying rockets at a record-setting pace, with a launch about every 4 days on average.
Amazon rejected the lawsuit’s claims.
“The claims on this lawsuit are completely without merit, and we sit up for showing that through the legal process,” an Amazon spokesperson said in a press release to CNBC.
Blue Origin has yet to offer a press release in response to CNBC’s request for comment on the lawsuit.
CB&T, represented by Recent York-based Grant & Eisenhofer, alleged two counts of breach of fiduciary duty against the defendants. CB&T didn’t disclose the scale of its Amazon stake, nor its total assets under management.
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The suit alleges that Amazon leadership didn’t conduct “any meaningful evaluation” on the rocket launch market, and approved the contracts after “two cursory meetings” and without protecting negotiations “from Bezos’ glaring conflict of interest.”
In July 2020, CB&T said that Bezos led Amazon management in telling the corporate’s audit committee that discussions were under way with Blue Origin and three other corporations for launch contracts, but SpaceX “was not among the many 4” options.
The suit also alleges the Bezos-led team did “not even consider SpaceX,” and the Amazon audit committee didn’t ask for or receive updates on the negotiations for nearly 18 months. Contract values, and the way much Amazon is paying in total for the launches, are redacted within the lawsuit.
In January 2022, the suit says Bezos’ team told the Amazon audit committee that two contracts had been fully negotiated with Blue Origin and ULA. Notably, the contract to make use of ULA’s Vulcan rocket brings direct profit to Blue Origin, as each Vulcan is powered by a pair of Blue Origin’s BE-4 rocket engines.
CB&T alleges the audit committee received only “a temporary summary of the terms of the contracts” and “rubberstamped” the deal “after only just a few minutes of debate.”
“It had no details about how Bezos and his management team conducted the negotiations with Blue Origin. It had no information concerning the level of Bezos’ involvement. It had no details about what number of other launch providers (if any) Bezos and his management team explored contracting with. It had no details about Blue Origin’s struggles to develop the Recent Glenn, about how these struggles might jeopardize Amazon’s ability to fulfill its FCC-mandated 2026 deadline, or about how Blue Origin planned to beat these struggles,” CB&T’s lawsuit says.
In March 2022, the Bezos team presented a summary of the Blue Origin and ULA contracts to the Amazon board for approval, together with a 3rd contract for European company Arianespace. CB&T highlighted that the deal was a pointy contrast to Amazon’s $13.7 billion acquisition of Whole Foods, a process during which the corporate engaged financial advisors.
“By completely abdicating its fiduciary duties, the Board has already exposed Amazon to substantial harm and placed the Company’s entire Kuiper program at useless risk. And with each passing day, as Amazon’s chosen launch partners (Blue Origin specifically) proceed to struggle and SpaceX continues to prove itself, this Board-inflicted harm continues to grow,” CB&T wrote.
“Bezos, it have to be assumed, couldn’t swallow his pride to hunt his bitter rival’s help to launch Amazon’s satellites,” the suit adds.