Question raised by pension fund lawsuit Amazon's choices in the Kuiper satellite launch transaction

 Amazon's choices in the Kuiper satellite launch transaction

The Project Kuiper broadband internet satellite constellation, which competes with SpaceX's Starlink satellite network, is being launched by Amazon, according to a lawsuit filed by an Ohio-based pension fund. The lawsuit claims that Amazon failed to give SpaceX proper consideration as a potential launch provider.

The lawsuit claims that Amazon's board of directors acted in bad faith when they selected three other providers last year, including Blue Origin, the space company owned by Amazon founder Jeff Bezos, but left out SpaceX. The lawsuit was filed in the Delaware Court of Chancery by the Cleveland Bakers and Teamsters Pension Fund.



IMAGE SOURCE - geekwire

The European Arianespace Consortium and United Launch Alliance, whose Vulcan Centaur rocket will use Blue Origin's BE-4 engine, were the other two businesses. The three agreements, according to the lawsuit, represent Amazon's second-largest capital spend after its $13.7 billion purchase of Whole Foods in 2017.

According to the lawsuit, Amazon has already spent close to $1.7 billion on the launch contract, including $585 million that was given to Blue Origin directly.

The CB&T Fund, which owns shares of Amazon, claims in its statement that the company's officers and directors, including the audit committee of the board of directors, "made no effort to properly discharge their fiduciary duties." It implies that Bezos' outside involvement in Blue Origin may have improperly impacted Amazon's actions.

The lawsuit chronicles the conflicts that have developed over time between Bezos and Elon Musk, the CEO of SpaceX, as well as the difficulties encountered when developing the New Glenn rocket by Blue Origin and the Vulcan rocket by ULA.

The company's ability to meet a nationally mandated deadline to deploy half of its planned 3,236 satellites by mid-2026 was called into question by the pension fund. It made the implication that the chances would have been better if Amazon had partnered with SpaceX, who it claimed "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 alleged in its lawsuit.

The lawsuit asks for specific compensation in the form of damages, legal fees, and "immediate disgorgement of all profits, benefits, and other compensation obtained by defendants as a result of their breaches of fiduciary duties."

The claims in this case are absolutely without merit, and we look forward to proving that via the legal process, an Amazon spokeswoman claimed in a statement sent by email.

Despite the hiccups, Amazon has stated that it is still on target to complete Project Kuiper's satellite deployment plan, which seeks to provide satellite access to millions of people worldwide. In contrast to SpaceX, which has orbited thousands of Starlink satellites and claims to have more than 1.5 million members, no satellites have yet been launched.

The first two of Amazon's prototype satellites might be launched on ULA's Atlas V rocket as early as September 26. By the end of the year, full production will start at the company's satellite facility in Kirkland, Washington. (For what it's worth, a factory in Redmond, Washington, is where SpaceX builds its Starlink satellites.)

Being the founder of both Blue Origin and Amazon, Bezos' involvement with Project Kuiper has long been viewed as potentially contentious. If the legal processes advance, it may become evident if Bezos took any extraordinary steps to remove himself from choices about publicly traded Amazon's relationship with privately owned Blue Origin.

However, in the past, Amazon executives have mentioned SpaceX as a viable option. The lawsuit claims that SpaceX was not even taken into consideration for the Kuiper launch contracts. For instance, Dave Limp, senior vice president for devices and services at Amazon, asserted in 2020 that Project Kuiper was "launch-agnostic" and cited SpaceX's Raptor engine, which runs on methane, as a "demonstration of breakthroughs."

Limp evaluated SpaceX's launch services in greater depth the previous year.

During a Washington Post online chat, he stated, "I would say Falcon 9 is definitely at the low end of the kind of capacity that we require. As you consider them acquiring more Falcon Heavys, but more significantly as you consider Starship and their efforts to put it into production readiness, those candidates for us also become quite plausible.



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