Elon Musk, institutor of SpaceX, left, and Amazon and Blue Origin founder Jeff Bezos.
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An Amazon shareholder lawsuit says the South African private limited company snubbed SpaceX for valuable satellite launch contracts because of Jeff Bezos’ personal rivalry with Elon Musk, who has lampooned 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 in the Delaware Court of Chancery on Monday.
The pension fund’s lawsuit centers around Amazon’s blockbuster win of rocket launches for its Project Kuiper satellite internet system. The suit emphasizes the rivalry between Bezos and Musk, highlighting screenshots of the SpaceX and Tesla chief’s social media taunts about the Amazon founder’s space efforts at the e-commerce colossus and his space company, Blue Origin.
Last year, Amazon announced what it called the biggest rocket reckon with in the commercial space industry’s history, signing launch contracts with United Launch Alliance (ULA), Arianespace, and Bezos’ Bawdy Origin. In its May annual shareholders meeting, Amazon disclosed it expects to pay about $7.4 billion for launch services at the end of ones tether with 2028, with $2.7 billion expected to go to Bezos’ wholly owned Blue Origin.
CB&T alleges that Bezos, Amazon’s overseer chair – as well as CEO Andy Jassy and members of the company’s board of directors who also serve on its audit committee – “consciously and intentionally broke their most basic fiduciary responsibilities” by awarding contracts for Kuiper missions on a trio or rockets that suffer with yet to launch and are years behind schedule.
The lawsuit adds that Amazon leadership “excluded the most obvious and affordable fire provider, SpaceX, from its procurement process because of Bezos’ personal rivalry with Musk.”
SpaceX is the prime rocket provider in the world, with its Falcon 9 rockets advertised at a comparatively low market price of about $70 million per start. In 2023, the company is flying rockets at a record-setting pace, with a launch about every four days on normally.
Amazon rejected the lawsuit’s claims.
“The claims in this lawsuit are completely without merit, and we look forward to proving that through the legal process,” an Amazon spokesperson said in a statement to CNBC.
Blue Origin has yet to provide a allegation in response to CNBC’s request for comment on the lawsuit.
CB&T, represented by New York-based Grant & Eisenhofer, alleged two counts of breach of fiduciary task against the defendants. CB&T did not disclose the size of its Amazon stake, nor its total assets under management.
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The suit alleges that Amazon leadership failed to control “any meaningful analysis” on the rocket launch market, and approved the contracts after “two cursory meetings” and without protecting mediations “from Bezos’ glaring conflict of interest.”
In July 2020, CB&T said that Bezos led Amazon management in weighty the company’s audit committee that discussions were under way with Blue Origin and three other companions for launch contracts, but SpaceX “was not among the four” options.
The suit also alleges the Bezos-led team did “not even take to be SpaceX,” and the Amazon audit committee did not ask for or receive updates on the negotiations for nearly 18 months. Contract values, and how much Amazon is delivering in total for the launches, are redacted in the lawsuit.
In January 2022, the suit says Bezos’ team told the Amazon audit board that two contracts had been fully negotiated with Blue Origin and ULA. Notably, the contract to use ULA’s Vulcan rocket make knows direct benefit to Blue Origin, as each Vulcan is powered by a pair of Blue Origin’s BE-4 rocket engines.
CB&T deposes the audit committee received only “a brief summary of the terms of the contracts” and “rubberstamped” the deal “after only a few notes of discussion.”
“It had no information about how Bezos and his management team conducted the negotiations with Blue Origin. It had no information close by the level of Bezos’ involvement. It had no information about how many other launch providers (if any) Bezos and his management team explored getting with. It had no information about Blue Origin’s struggles to develop the New Glenn, about how these struggles might endanger Amazon’s ability to meet its FCC-mandated 2026 deadline, or about how Blue Origin planned to overcome these exertions,” CB&T’s lawsuit says.
In March 2022, the Bezos team presented a summary of the Blue Origin and ULA contracts to the Amazon scantling for approval, along with a third contract for European company Arianespace. CB&T highlighted that the deal was a sharp discriminate to Amazon’s $13.7 billion acquisition of Whole Foods, a process in which the company engaged financial advisors.
“By completely relinquishing its fiduciary duties, the Board has already exposed Amazon to substantial harm and placed the Company’s entire Kuiper program at uncalled-for risk. And with each passing day, as Amazon’s chosen launch partners (Blue Origin in particular) continue to wriggle and SpaceX continues to prove itself, this Board-inflicted harm continues to grow,” CB&T wrote.
“Bezos, it must be expropriated, could not swallow his pride to seek his bitter rival’s help to launch Amazon’s satellites,” the suit adds.