An institutional investor prosecuted Amazon.Com, Inc (NASDAQ: AMZN) and its board, including Jeff Bezos, over launch contracts awarded to Bezos' space company, Blue Origin.
Amazon shareholders, the Cleveland Bakers and Teamsters Pension Fund, claim that Amazon's board quickly approved the launch agreements for Project Kuiper without considering competitor SpaceX, TechCrunch reports.
Project Kuiper is Amazon's constellation of 3,236 low-Earth satellites to blanket the globe, versus Elon Musk-led SpaceX's Starlink broadband mega constellation.
Amazon failed to timely launch its first two test satellites for its Project Kuiper constellation. Meanwhile, SpaceX has launched 4,543 Starlink satellites in 88 launches, with 4,219 in orbit.
The suit alleges that Amazon's directors spent less than 40 minutes approving the launch contracts, funneling money to Bezos' struggling rocket company without proper due diligence.
The plaintiffs argue that the board failed to address Bezos' conflict of interest.
Project Kuiper, Amazon's satellite broadband initiative, won regulatory approval in 2020.
The company faced the challenge of deploying a constellation of over 3,200 satellites into orbit within a tight 9-year timeline.
The lawsuit flagged Amazon's negotiations with Blue Origin, Arianespace, United Launch Alliance, and an unnamed company for launch contracts.
The plaintiffs express confusion over the omission of SpaceX, noting its reputation and reliability in the space industry.
Amazon ultimately selected Arianespace, Blue Origin, and United Launch Alliance for the launch contracts. These contracts represent a significant capital expenditure for Amazon, with nearly 45% of the value going to Blue Origin.
The legal filing also flagged the ongoing rivalry between Blue Origin and SpaceX and personal conflicts between Elon Musk and Jeff Bezos.
Price Action: AMZN shares traded higher by 1.13% at $139.57 premarket on the last check Friday.