SpaceX founder Elon Musk, left, and Amazon and Blue Origin founder Jeff Bezos.
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An Amazon shareholder lawsuit says the company turned down SpaceX for valuable satellite launch contracts because of Jeff Bezos’ personal rivalry with Elon Musk, who has mocked his fellow billionaire’s space ambitions for years.
The Cleveland Bakers and Teamsters Pension Fund (CB&T) filed a shareholder complaint on behalf of Amazon in the Delaware Court of Chancery on Monday.
At the heart of the pension fund’s lawsuit is Amazon’s blockbuster purchase of rocket launches for its Project Kuiper satellite internet system. The lawsuit underscores the rivalry between Bezos and Musk and includes screenshots of the SpaceX and Tesla bosses’ social media taunts about the Amazon founder’s space efforts at the e-commerce giant and its space company Blue Origin.
Last year Amazon announced what it believes to be the largest rocket deal in the history of the commercial space industry, signing launch deals with United Launch Alliance (ULA), Arianespace and Bezos’ Blue Origin. At its annual shareholder meeting in May, Amazon said it expects to pay about $7.4 billion for launch services through 2028, with $2.7 billion expected to go to wholly-owned Blue Origin from Bezos.
CB&T alleges that Bezos, Amazon’s chief executive officer — as well as CEO Andy Jassy and members of the company’s board of directors, who also serve on the audit committee — “knowingly and intentionally breached their most fundamental fiduciary duties” by taking orders for Kuiper missions a trio or rockets that have not yet launched and are years behind schedule.
The lawsuit further states that Amazon leadership “excluded the most obvious and affordable launch vehicle provider, SpaceX, from its procurement process due to Bezos’ personal rivalry with Musk.”
SpaceX is the world’s leading rocket supplier, whose Falcon 9 rockets are advertised at a comparatively low market price of around US$70 million per launch. In 2023, the company is launching rockets at record-breaking speeds, with an average launch about every four days.
Amazon dismissed the claims of the lawsuit.
“The claims in this lawsuit are completely without merit, and we look forward to proving that at the trial,” an Amazon spokesman said in a statement to CNBC.
Blue Origin has not yet responded to CNBC’s request for comment on the lawsuit.
CB&T, represented by New York-based Grant & Eisenhofer, alleged against the defendants two counts of breach of fiduciary duty. CB&T did not disclose the size of its Amazon stake or its total assets under management.
The lawsuit alleges that Amazon leadership failed to “perform a meaningful analysis” of the rocket launch market and approved the contracts after “two perfunctory meetings” without shielding the negotiations “from Bezos’ blatant conflicts of interest.”
In July 2020, CB&T said that Bezos spearheaded Amazon management by telling the company’s audit committee that talks were ongoing with Blue Origin and three other companies for launch deals, but that SpaceX was “not among the four” options.
The lawsuit also alleges that the Bezos-led team “didn’t even consider SpaceX” and that Amazon’s audit committee did not request or receive any updates on the negotiations for nearly 18 months. Contract values and how much Amazon is paying in total for the market launches are blacked out in the lawsuit.
In January 2022, the lawsuit alleges, Bezos’ team notified Amazon’s audit committee that two contracts with Blue Origin and ULA had been fully negotiated. In particular, the contract to use ULA’s Vulcan rocket brings direct benefits to Blue Origin, as each Vulcan is powered by a pair of Blue Origin BE-4 rocket engines.
CB&T claims the audit committee received only “a brief summary of the terms of the deal” and “stamped” the deal “after just a few minutes of discussion.”
“There was no information about how Bezos and his management team conducted negotiations with Blue Origin. It had no information about Bezos’ level of involvement. It had no information about how many other launch vendors (if any) Bezos and his management team had.” to meet the 2026 deadline set by the FCC, or how Blue Origin sought to overcome these issues,” CB&T’s lawsuit reads.
In March 2022, the Bezos team submitted a summary of the Blue Origin and ULA contracts to Amazon’s board of directors for approval, along with a third contract for European company Arianespace. CB&T noted that the deal marked a sharp contrast to Amazon’s $13.7 billion acquisition of Whole Foods, in which the company hired financial advisors.
“By completely waiving its fiduciary duties, the board has already done significant harm to Amazon and has placed the company’s entire Kuiper program at unnecessary risk. And with each day that passes, as Amazon’s chosen launch partners (particularly Blue Origin) continue to struggle and SpaceX continues to prove itself, this damage done by the board continues to mount,” CB&T wrote.
“It must be assumed that Bezos could not contain his pride to enlist the help of his bitter rival to launch the Amazon satellites,” the lawsuit continues.