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Why Bezos and the Amazon board end up in the dock because of the launch contracts for Blue Origin

Why Bezos and the Amazon board end up in the dock because of the launch contracts for Blue Origin

An Amazon shareholder has filed a lawsuit against founder Jeff Bezos and Amazon's board questioning the relationship between Amazon's satellite broadband venture, Project Kuiper, and Jeff Bezos' space company, Blue Origin.

Amazon accused of "funneling" contracts to Bezos-owned Blue Origin.

A shareholder in the Seattle tech giant has filed a lawsuit against company founder Jeff Bezos and his board for allegedly exercising bad judgment and failing to act in good faith in selecting launch suppliers for Project Kuiper.

The lawsuit filed by the Cleveland Bakers and Teamsters Pension Fund earlier this week alleges that Amazon's board awarded contracts worth billions of dollars to Blue Origin, the aerospace company founded by Jeff Bezos, and failed to consider SpaceX, of owned by rival Elon Musk, as an alternative launch provider despite its proven track record.

Amazon's Kuiper project has the authorization to launch 3,236 satellites to be placed in low Earth orbit, to form a constellation intended to provide Internet access even in remote locations. The company has pledged to invest $10 billion in the project, aiming to catch up with SpaceX's rapidly growing Starlink network, which already offers Internet services to thousands of customers in dozens of countries.

To launch Kuiper satellites, Amazon signed contracts for 38 launches with Ula in April 2022; 18 launches with the European company Arianespace; and 12 launches with Blue Origin , with an option for as many as 15 additional launches with the private venture owned by Amazon founder Jeff Bezos. So Amazon was careful not to discard rival SpaceX, leader in rocket launches, as the supplier of launches for its Kuiper satellites.

Now Amazon's shareholder pension fund is seeking unspecified damages and legal costs from the tech giant, according to the lawsuit filed Aug. 28 in the Delaware Court of Chancery, Reuters reports.

All the details.

THE CAUSE FILED AGAINST BEZOS AND AMAZON ABOUT BLUE ORIGIN CONTRACTS

The lawsuit claims Amazon has already paid about $1.7 billion to the project's three launch providers, including $585 million directly to Blue Origin, adding that the company has not yet launched a prototype of its Kuiper satellite into orbit.

The Cleveland Bakers and Teamsters Pension Fund, a multi-employer fund, said in its statement that the pitch contracts represented the second-largest capital expenditure in Amazon's history at the time. Amazon's largest acquisition is the $13.7 billion deal to buy Whole Foods in 2017.

The lawsuit claims the board met in March 2022 to discuss the three launch contracts and allegedly approved the contracts in 40 minutes based on little information and without requiring any kind of expert review,Gizmodo adds.

SPACEX A PRIOR EXCLUDED

Also according to the pension fund indictment, Bezos and Amazon did not consider Elon Musk's aerospace company, SpaceX, for the contracts. Shareholders said SpaceX was "inexplicably" not in the group of companies that Amazon presented to the board of directors and suggested that this was due to an ongoing rivalry between the two founders of the technology.

At the same time, Amazon made the success of the Kuiper project “critically dependent” on Blue Origin, putting Bezos – founder of Amazon and owner of Blue Origin – in a position to benefit from both, claims the lawsuit filed by the Cleveland Bakers and Teamsters Pension Fund

In total, Amazon is relying on Blue Origin for 78% of its planned launches, the lawsuit says.

WHAT STATUS IS THE KUIPER PROJECT AT

Amazon launched Project Kuiper in 2019, hoping to use low-Earth orbit satellites to increase access to high-speed, low-latency broadband in areas that currently lack reliable internet connectivity. Amazon operates an R&D center for the project in Redmond and last year announced plans for a manufacturing facility in Kirkland to manufacture the satellites.

In July, however, the Seattle giant founded by Jeff Bezos announced that it will invest 120 million dollars in a facility for preparing Kuiper satellites for launch, at NASA's Kennedy Space Center in Florida.

Additionally, Amazon plans to launch the first prototype Internet satellites into space in 2024 and offer the first commercial tests shortly thereafter. Amazon's satellite internet unit will begin mass production of the satellites later this year and aims to launch two prototype satellites "in the coming months." The 2024 implementation goal would keep Amazon on track to meet the FCC's regulatory mandate to launch half of its entire Kuiper network of 3,236 satellites by 2026.

THE LOCATION OF AMAZON

So did founder Bezos and the Amazon board "privilege" Bezos' aerospace company Blue Origin to launch Project Kuiper satellites?

A Delaware judge will determine, meanwhile, an Amazon spokesman said: "The claims in this lawsuit are completely without merit and we look forward to proving it through the legal process."


This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/perche-bezos-e-il-board-di-amazon-finiscono-alla-sbarra-a-causa-dei-contratti-di-lancio-per-blue-origin/ on Mon, 04 Sep 2023 14:00:30 +0000.