Amazon sued by shareholders for excluding SpaceX in Kuiper launch bid

A pension fund is suing Amazon over its contract to launch Kuiper satellites on Blue Origin, ULA, and Arianespace rockets because SpaceX was not included in the discussion. The suit argues that Bezos’ rivalry with Elon Musk created contracts that did not best meet the company’s fiduciary responsibility to its shareholders.

Amazon didn’t include SpaceX in its contract discussions

The Cleveland Bakers and Teamsters Pension Fund is suing Amazon that it didn’t meet its fiduciary responsibility to its shareholders when assessing companies for its launch contract of Kuiper satellites. While four companies were looked at for the contract, one major company was left out, SpaceX. CB&T believe that since SpaceX is the cheapest and biggest commercial launcher currently on the market, that it should have at least been considered.

Last year, Amazon announced contracts with Blue Origin, ULA, and Arianespace for combined 83 launches of its LEO constellation Kuiper satellites. The satellites will ride on each company’s newest rockets being developed, Blue Origin’s New Glenn, ULA’s Vulcan, and Arianespace’s Ariana 6. None of which have yet to fly although all are nearing completion, at some point in the next year or two.

In 2020, when Bezos was still CEO of Amazon, discussion were underway with several companies, Blue Origin being one of them, for a launch contract. However, Amazon told its own audit committee that SpaceX was not in the mix.

CB&T is claiming that Amazon never considered SpaceX for the launch at all and points towards the long rivalry between the two company’s founders. If you don’t know, Musk and Bezos have feuded publicly on numerous occasions. Blue Origin also ran a pretty nasty (in business terms) smear campaign against SpaceX when Starship won NASA’s Human Landing System contract. A court later denied Blue Origin’s protest but NASA eventually selected Blue Origin in a second contract for future Artemis missions.

According to a book written by Tim Fernholz called Rocket Billionaires: Elon Musk, Jeff Bezos, and the New Space Race, Musk and Bezos met in both of their company’s early days to see if the two could merge. However, the meeting did not go well, with the two agreeing on very little.

Amazon stated the suit is “without merit” and will show that in court.

Beside Bezos being the largest shareholder and executive chairman of Amazon and the owner of Blue Origin, Blue Origin has interests in ULA as its Vulcan rocket is powered by two BE-4 engines.

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Is this any different from Starlink?

So if boiled down to what this lawsuit is about, Amazon, who owns Project Kuiper, might be showing favoritism towards companies that its largest shareholder, Bezos, owns or has contracts with. However, Kuiper’s largest competitor, Starlink owned by SpaceX, launches exclusively on Falcon 9 rockets. Giving them an edge to get to orbit on rockets at cost.

What’s the difference? Well only that SpaceX and Starlink are the same company versus Blue Origin and Amazon’s Kuiper. But more importantly, Amazon is a publicly traded company. Noticed who is bringing forth the lawsuit? A pension fund.

When a company goes public their responsibilities change, management of the company has a responsibility to its shareholders to make the best deals it negotiates on behalf of them. Now all companies, private or public, have a responsibility to do this with its shareholders but public companies’ are regulated by the SEC, upping the stake.

So is Amazon in the wrong by excluding one of its sister company’s competitors? If Starlink was spun out of SpaceX would this be the same thing?

CB&T will have to prove their allegations in court, which like I’ve stated in the past, can take a very long time.