Lawsuit over Kuiper Contracts Targeted for Dismissal by Amazon
Dec 15, 2023
Amazon currently seeks the dismissal of a damaging shareholder lawsuit that alleges the company’s board showed favoritism and conflicts of interest when awarding launch contracts for the ambitious Project Kuiper satellite internet constellation. Filed in August by a Cleveland pension fund, the lawsuit claims Amazon intentionally avoided SpaceX to instead grant lucrative launch deals to firms tied to Amazon founder Jeff Bezos. Amazon asserts the suit fails to provide evidence of any improper misconduct.
Blue Origin Rocket. Credit: Amazon
The lawsuit centers on Amazon board approval in 2021 of multibillion-dollar Project Kuiper launch contracts with Arianespace, Blue Origin and United Launch Alliance – the second-priciest capital expenditure ever for cash-rich Amazon. The suit estimates nearly half the value flows to Bezos’ Blue Origin firm. Yet it claims the board allotted a mere 40 minutes to review the massive contracts that will shape Amazon’s future in space-based connectivity.
In a December Court of Chancery filing, Amazon maintained its board met due diligence requirements when approving the complex web of Kuiper launch deals after extensive discussion over multiple meetings. The company says even if the review was as quick as alleged, that would fall short of demonstrating the outright abdication of duty needed to substantiate a shareholder claim of misconduct.
However, Amazon’s heavily redacted filing leaves unaddressed core claims regarding the exclusion of SpaceX in order to benefit Bezos’ nascent New Glenn rocket program. In fact, Amazon recently contracted with SpaceX for supplementary Kuiper launches – a seeming reversal not explained in the legal response. Also unmentioned is the sudden departure of senior executive Dave Limp, under whose authority Kuiper’s contested launch contracts were structured and approved last year.
Buried in redactions, the document reveals little solid information about how Amazon handled Bezos’ apparent conflicts of interest as both a sitting board member and billionaire rocket industry tycoon. Dismissal of the shareholder lawsuit may permanently shield the examination of internal processes and discussion around Bezos’ dual roles guiding the company while vying for its largest contracts.
In essence, Amazon currently insists Project Kuiper’s unprecedented launch agreements with its founder’s rocket startup – representing potentially tens of billions in revenue for Blue Origin – resulted from typical prudent business analysis, nothing more. And unless compelled by the court, the tech giant seems intent on keeping further details of its contracting process private.
Yet questions around preferential treatment and undue Bezos influence are unlikely to disappear even if legal scrutiny fades. While Amazon maintains its actions were in corporate and shareholder interests, its reticence leaves doubts that may only grow if Bezos’ struggling New Glenn delays risk Project Kuiper’s future. More broadly, as regulators weigh antitrust action and Amazon faces employee unrest, the board’s independence and integrity remain in the spotlight.
If Amazon’s massive gambit on space connectivity flops, commercial favoritism benefiting Bezos rather than shareholders may return to haunt the company. Its leadership can dodge current lawsuits, but likely not skepticism surrounding business and ethical judgments that effectively entrusted Amazon’s next potential engine of growth to its departing founder’s unproven personal venture.
