![Vulcan's core stage is lifted into a processing facility at Cape Canaveral, Florida, in January 2023.](https://cdn.arstechnica.net/wp-content/uploads/2023/02/20230125194923_608707-800x600.jpeg)
United Launch Alliance
Shareholders of a pension fund that features Amazon stock have sued the corporate, its founder Jeff Bezos, and its board of directors for “breaching their fiduciary duty” as a part of a contract to amass launch services for the Project Kuiper megaconstellation.
The lawsuit, filed on Thursday and first reported by the Delaware Business Court Insider, alleges that in purchasing launches for Kuiper, Amazon failed to think about SpaceX and its Falcon 9 rocket. This was the one prudent alternative that will have enabled Amazon to launch half of its constellation by a 2026 deadline, the lawsuit states.
The plaintiffs say that the Falcon 9 costs lower than its competitors and has other benefits, akin to being available now. Nevertheless, the lawsuit alleges, SpaceX was never considered attributable to an intense and private rivalry between that launch company’s founder, Elon Musk, and Bezos, who has a competing rocket company in Blue Origin.
“Given these aspects, Amazon’s persistent refusal to even consider SpaceX—and the Board’s failure to query its exclusion—lays bare the extent to which Bezos’ personal rivalry influenced Amazon’s procurement process,” the lawsuit states.
Mega-launch contracts
At issue is Amazon’s mega-award in 2022 for launch contracts to a few firms, Blue Origin, United Launch Alliance, and Europe-based Arianespace. With this deal for 83 total launches, Amazon acquired a unprecedented amount of medium- and heavy-lift launch capability over the subsequent five years, procuring launches from every major Western provider aside from its direct satellite competitor, SpaceX.
Amazon didn’t specify the worth of the deal, however the lawsuit notes it was “the second-largest capital expenditure” in Amazon’s history, after the corporate’s $13.7 billion acquisition of Whole Foods. The corporate’s second-largest acquisition of studio MGM was valued at $8.5 billion in 2021. Moreover, the lawsuit states that Amazon has already paid $1.7 billion to the three launch providers, including $585 million on to Blue Origin.
The first issue raised by the lawsuit is that Amazon’s board of directors didn’t consider SpaceX as a possible launch contractor and as a substitute selected firms that will enrich Bezos. He founded and owns Blue Origin, and his launch company also has a contract to supply rocket engines for United Launch Alliance’s Vulcan rocket.
The lawsuit makes much of the continuing delays to Blue Origin’s Latest Glenn rocket and the Vulcan booster. Decisions concerning the launch contracts for Project Kuiper were made when it was clear these large boosters wouldn’t be able to deliver large numbers of satellites ahead of a 2026 deadline set by the Federal Communications Commission.
“The near-constant drumbeat of delays and bad news from Blue Origin and its business partner and customer, ULA, now threatens to jeopardize your complete Kuiper program, underscoring the harm the Board’s utter failure to comply with its fiduciary duties has caused to Amazon,” the lawsuit states.
By way of relief, the plaintiffs are in search of damages and attorney’s fees.
Amazon said there is no such thing as a validity to the lawsuit. “The claims on this lawsuit are completely without merit, and we stay up for showing that through the legal process,” an Amazon spokesperson told Ars.
Kuiper and due consideration
The multinational technology company announced in 2019 that it could develop a big broadband satellite Web constellation in 2019 called Project Kuiper. Under the license it received from the Federal Communications Commission, Amazon is required to launch half of its planned 3,236 satellites into low-Earth orbit by July 30, 2026. The rest should be launched inside three years of that. Nonetheless, it is usually expected that if Amazon demonstrates progress toward that goal, it could receive an extension on these deadlines.
The lawsuit is spicy from the standpoint of the space community, since it highlights the tensions between Musk and Bezos and the undeniable fact that Musk’s company has consistently outperformed Blue Origin in nearly all manner of spaceflight activities. Nonetheless, it just isn’t clear how much legal ground there’s to face upon here.
Amazon has a ready defense. In not considering SpaceX, it selected to not fund its largest competitor within the space-based Web business. SpaceX, with its Starlink constellation, is five years ahead of Amazon and already has launched 5,000 satellites. In purchasing Falcon 9 rockets, Amazon would have been, in effect, funding the further development and improvement of the Starlink service.
The core issue is more likely to be whether Amazon directors gave due consideration to this, and other related matters. The meetings to approve these launch contracts, in response to the lawsuit, were transient and perfunctory. Perhaps the actual query is whether or not Amazon’s directors must have spent more time discussing whether launching its Kuiper satellites on time, and sure for about half the associated fee of its other options, outweighed the downside of supporting a competitor’s business.