An Amazon shareholder has initiated legal action against founder Jeff Bezos and the Amazon board, alleging that the directors failed to adequately assess the decision to grant launch contracts for Project Kuiper, the company’s satellite initiative, to Blue Origin, Bezos’s space enterprise.
The recent lawsuit, presented by the Cleveland Bakers and Teamsters Pension Fund, contends that the Amazon board granted substantial contracts amounting to billions of dollars to Blue Origin without considering SpaceX, led by Elon Musk, a prominent competitor with an established track record in the field of space launches.
Project Kuiper, an ambitious endeavor aiming to create a network of more than 3,000 satellites to deliver broadband internet to remote areas, is set to rival Musk’s Starlink project.
When questioned about the lawsuit, an Amazon spokesperson expressed in an email to Reuters, “The claims in this lawsuit are completely without merit, and we look forward to showing that through the legal process.”
The pension fund, Cleveland Bakers and Teamsters Pension Fund, which represents multiple employers, asserted in its legal filing that the launch contracts represented the second-largest capital expenditure in Amazon’s history at the time.
Amazon’s most significant acquisition was its 2017 purchase of Whole Foods for $13.7 billion.
As per the lawsuit, Amazon has already disbursed around $1.7 billion to the three launch providers involved in the Project Kuiper initiative.
Of this, $585 million was paid directly to Blue Origin.
However, the company is yet to launch a prototype of its Kuiper satellite into orbit.
According to Amazon’s announcements earlier this year, Project Kuiper is scheduled to commence mass production of the satellites later in the current year.
Beta testing with commercial clients is anticipated to begin in 2024.
Amazon’s targeted deployment of the Kuiper network’s full complement of 3,236 satellites by 2026 aligns with regulatory obligations set by the Federal Communications Commission (FCC).
In the legal suit, the pension fund is pursuing unspecified damages and legal expenses.
The lawsuit was officially lodged on August 28 in the Delaware Court of Chancery.