Amazon investors sue company for not considering SpaceX as potential launch provider
In a lawsuit filed by Amazon investors, they claim that the company’s decision to give major and expensive launch contracts to Arianespace, ULA, and Blue Origin to put its planned 3,200 Kuiper satellite constellation into orbit but never even consider using SpaceX indicates a failure at due diligence for the shareholders as well as a possible conflict of interest.
The plaintiff’s biggest concern was the decision to give Blue Origin the contract.
The suit, filed by Amazon shareholders the Cleveland Bakers and Teamsters Pension Fund, alleges that the board spent less than 40 minutes approving the launch agreements for Amazon’s Project Kuiper mega-constellation, while not even considering leading launch company (and Blue Origin rival) SpaceX. “Amazon’s directors likely devoted barely an hour before blindly signing off on funneling […] Amazon’s money to Bezos’ unproven, struggling rocket company,” the suit says. The plaintiffs say the board failed to protect the negotiation process “from Bezos’ glaring conflict of interest.”
It appears these investors might have a point, as so far Amazon has paid these launch companies about $1.7 billion, with Blue Origin getting $585 million, though not one satellite has yet launched. Moreover, it appears from all counts that it will be very difficult for these companies — especially Blue Origin — to complete the required missions necessary to get into orbit half of Amazon’s constellation by 2026, as required by its FCC license.
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In a lawsuit filed by Amazon investors, they claim that the company’s decision to give major and expensive launch contracts to Arianespace, ULA, and Blue Origin to put its planned 3,200 Kuiper satellite constellation into orbit but never even consider using SpaceX indicates a failure at due diligence for the shareholders as well as a possible conflict of interest.
The plaintiff’s biggest concern was the decision to give Blue Origin the contract.
The suit, filed by Amazon shareholders the Cleveland Bakers and Teamsters Pension Fund, alleges that the board spent less than 40 minutes approving the launch agreements for Amazon’s Project Kuiper mega-constellation, while not even considering leading launch company (and Blue Origin rival) SpaceX. “Amazon’s directors likely devoted barely an hour before blindly signing off on funneling […] Amazon’s money to Bezos’ unproven, struggling rocket company,” the suit says. The plaintiffs say the board failed to protect the negotiation process “from Bezos’ glaring conflict of interest.”
It appears these investors might have a point, as so far Amazon has paid these launch companies about $1.7 billion, with Blue Origin getting $585 million, though not one satellite has yet launched. Moreover, it appears from all counts that it will be very difficult for these companies — especially Blue Origin — to complete the required missions necessary to get into orbit half of Amazon’s constellation by 2026, as required by its FCC license.
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.
Reading the contracts and lawsuit, it was discussed that a fourth launch provider’s name was redacted. Most likely that name was SpaceX.
All I can say is don’t mess with the Teamsters, or Jeff Bezos will end up like Jimmy Hoffa.
If Amazon really wanted to hurt Starlink, they could have bought all 83 launches on SpaceX, not only providing the least expensive launch service, but also ensuring that Kuiper launches would have priority over Starlink launches. SpaceX has always given priority to paying customers, as they did with OneWeb. Starlink gets the launch slots that aren’t taken by paying customers.
Maybe that would have given Musk the opportunity to charge Bezos a non-refundable cash-on-the-barrel deposit of 100%, plus a 100% priority-bump fee, also in cash?
Just kidding. Maybe.
It occurred to me while reading the post that Amazon’s Project Kuiper may just be a money laundering scheme. What gives me that sense are the delays of all three launch providers having an orbital launch capability for Kuiper. Maybe this will get Jeff to get over his ego and actually pay the going rate for Falcon 9 launches. As Diane Wilson pointed out, Kuiper will get launch priority over Starlink. What better way to poke at Elon.
Primary responsibility of a corporation: maximize profit.
No way would Musk give Kuiper priority over Starlink, his cash cow. He’d likely allocate some paying launches at a stiff premium.
Make money while shafting Bezos.
I sure wouldn’t put money into Kuiper. Musk has first mover advantage, already has improved the satellites and when Starship flies, the ability to build out his constellation far faster than Bezos can.
I think the Amazon investors are going to lose their money on this one.