An Amazon shareholder has filed a lawsuit against founder Jeff Bezos and the Amazon board alleging directors failed to fully vet a decision to award launch contracts for the company’s Project Kuiper satellite project to Blue Origin, Bezos’s space company.

The lawsuit filed by Cleveland Bakers and Teamsters Pension Fund earlier this week claims that the Amazon board awarded contracts worth billions of dollars to Blue Origin and did not consider rival Elon Musk-owned SpaceX as an alternative launch provider despite its track record.

Amazon’s Project Kuiper is a planned network of over 3,000 satellites designed to beam broadband internet to remote regions. That makes it a rival to Musk’s Starlink.

Asked about the lawsuit, an Amazon spokesperson said in an email to Reuters: “The claims in this lawsuit are completely without merit, and we look forward to showing that through the legal process.”

Cleveland Bakers and Teamsters Pension Fund, a multi-employer fund, said in its filing that the launch contracts were the second-largest capital expenditure in Amazon’s history at the time. Amazon’s largest acquisition is its $13.7 billion (nearly Rs. 1,13,320 crore) deal to buy Whole Foods in 2017. 

Amazon has already paid about $1.7 billion (nearly Rs. 14,050 crore) to the three launch providers in the project, including $585 million (nearly Rs. 4,850 crore) to Blue Origin directly, the lawsuit states, adding that the company has not yet launched a prototype of its Kuiper satellite into orbit.

Project Kuiper will begin mass-producing the satellites later this year and beta testing with commercial customers in 2024, Amazon said earlier this year. 

The 2024 deployment target would keep Amazon on track to fulfill a regulatory mandate by the FCC to launch half its entire Kuiper network of 3,236 satellites by 2026.

The pension fund seeks unspecified damages and legal fees, according to a lawsuit filed on August 28 in the Delaware Court of Chancery. 

© Thomson Reuters 2023