Amazon files to have shareholder lawsuit dismissed
On December 11, 2023 Amazon requested dismissal of a shareholder lawsuit against it for acting in bad faith by excluding SpaceX in its initial launch contracts with ULA, Arianespace, and Blue Origin to put its Kuiper constellation of satellites into orbit.
The lawsuit claimed that the board performed little diligence on the proposed contracts to launch the 3,236-satellite constellation with the Ariane 6, New Glenn and Vulcan Centaur rockets. The combined contracts were, it stated, the second largest capital expenditure in Amazon’s history at the time, trailing only its $13.7 billion acquisition of grocer Whole Foods.
The lawsuit stated that the board and its audit committee spent “barely an hour” reviewing those contracts, including those that would go to Blue Origin and ULA. Blue Origin is owned by Amazon founder and former chief executive Jeff Bezos, while ULA has a contract with Blue Origin to use BE-4 engines on its Vulcan rocket. The suit estimated that nearly 45% of the value of the contracts goes to Blue Origin either directly or through the BE-4 engine contract with ULA.
Amazon’s call for dismissal disputes these claims, stating that the board spent far more time on the issue, and then documents this. Interestingly, it makes no mention of the recent additional launch contract Amazon signed with SpaceX on December 3, 2023, but it is obvious that this filing was timed to occur afterward in order to strengthen Amazon’s case.
Amazon’s response (available at the link above) is heavily redacted, so some of the company’s claims are difficult to assess. For example, if the board did consider the issue of launch contractors properly, the subject of using SpaceX should have come up and been discussed at length. The redactions make it impossible to determine if this was so. If anything, what can be read suggests SpaceX was dismissed as an option far too quickly.
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On December 11, 2023 Amazon requested dismissal of a shareholder lawsuit against it for acting in bad faith by excluding SpaceX in its initial launch contracts with ULA, Arianespace, and Blue Origin to put its Kuiper constellation of satellites into orbit.
The lawsuit claimed that the board performed little diligence on the proposed contracts to launch the 3,236-satellite constellation with the Ariane 6, New Glenn and Vulcan Centaur rockets. The combined contracts were, it stated, the second largest capital expenditure in Amazon’s history at the time, trailing only its $13.7 billion acquisition of grocer Whole Foods.
The lawsuit stated that the board and its audit committee spent “barely an hour” reviewing those contracts, including those that would go to Blue Origin and ULA. Blue Origin is owned by Amazon founder and former chief executive Jeff Bezos, while ULA has a contract with Blue Origin to use BE-4 engines on its Vulcan rocket. The suit estimated that nearly 45% of the value of the contracts goes to Blue Origin either directly or through the BE-4 engine contract with ULA.
Amazon’s call for dismissal disputes these claims, stating that the board spent far more time on the issue, and then documents this. Interestingly, it makes no mention of the recent additional launch contract Amazon signed with SpaceX on December 3, 2023, but it is obvious that this filing was timed to occur afterward in order to strengthen Amazon’s case.
Amazon’s response (available at the link above) is heavily redacted, so some of the company’s claims are difficult to assess. For example, if the board did consider the issue of launch contractors properly, the subject of using SpaceX should have come up and been discussed at length. The redactions make it impossible to determine if this was so. If anything, what can be read suggests SpaceX was dismissed as an option far too quickly.
Readers!
Please consider supporting my work here at Behind the Black. Your support allows me the freedom and ability to analyze objectively the ongoing renaissance in space, as well as the cultural changes -- for good or ill -- that are happening across America. Fourteen years ago I wrote that SLS and Orion were a bad ideas, a waste of money, would be years behind schedule, and better replaced by commercial private enterprise. Only now does it appear that Washington might finally recognize this reality.
In 2020 when the world panicked over COVID I wrote that the panic was unnecessary, that the virus was apparently simply a variation of the flu, that masks were not simply pointless but if worn incorrectly were a health threat, that the lockdowns were a disaster and did nothing to stop the spread of COVID. Only in the past year have some of our so-called experts in the health field have begun to recognize these facts.
Your help allows me to do this kind of intelligent analysis. I take no advertising or sponsors, so my reporting isn't influenced by donations by established space or drug companies. Instead, I rely entirely on donations and subscriptions from my readers, which gives me the freedom to write what I think, unencumbered by outside influences.
You can support me either by giving a one-time contribution or a regular subscription. There are four ways of doing so:
1. Zelle: This is the only internet method that charges no fees. All you have to do is use the Zelle link at your internet bank and give my name and email address (zimmerman at nasw dot org). What you donate is what I get.
2. Patreon: Go to my website there and pick one of five monthly subscription amounts, or by making a one-time donation.
3. A Paypal Donation or subscription:
4. Donate by check, payable to Robert Zimmerman and mailed to
Behind The Black
c/o Robert Zimmerman
P.O.Box 1262
Cortaro, AZ 85652
You can also support me by buying one of my books, as noted in the boxes interspersed throughout the webpage or shown in the menu above.
The lawsuit is because of something they did a while ago.
Getting a few Space-X contracts does not correct the past situation which cost them millions in lost revenue and a possible deadline. All because those at Amazon can not get over their Musk hate and think of business first.
It also looks like illegal fund transfers from Amazon to other Amazon founders companies with no return.
The government might look the other way on this if they convert some or all of those transfers to actual loans from one company to another.
If AMZ had engaged with SpaceX from the start then the Kuiper system could now be competing directly with Starlink vs remaining just a promise presuming they could successfully build the satellites and ground infrastructure,(something they much more clearly have the skills to do).
IMHO the shaeholders still have a very strong case. If not against the AMZ board, then almost certainly against Blue Origins and/or Bezos himself because whistleblower disclosures have revealed that Blue Origins ignored contractual obligations and withheld schedule concerns for the BE4 from ULA. If they did indeed do that then it seems quite plausible they weren’t adequately forthcoming with AMZ either.
The really intriguing question here I think is what did Bezos know, and when did he know it? Because he is a principle with fiduciary responsibilities on both sides with an obvious conflict of interest. It’s probably a good thing (for him) that he can afford the best (and therefore least principled) lawyers..