An Amazon (NASDAQ:AMZN) shareholder has filed a lawsuit against founder Jeff Bezos and Amazon’s board, alleging that the directors failed to adequately evaluate the decision to award launch contracts for the company’s Project Kuiper satellite to Blue Origin, Bezos’ space company.
The lawsuit, filed earlier this week by Cleveland Bakers and Teamsters Pension Fund, claims that Amazon’s board awarded contracts worth billions of dollars to Blue Origin and did not consider rival Elon Musk’s 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 provide broadband internet to remote areas, making it a competitor to Musk’s Starlink.
In response to the lawsuit, an Amazon spokesperson stated in an email to Reuters, “The claims in this lawsuit are entirely without merit, and we look forward to showing that through the legal process.”
Cleveland Bakers and Teamsters Pension Fund, a multi-employer pension fund, stated in its filing that the launch contracts were the second-largest capital expenditure in Amazon’s history at the time. Amazon’s largest acquisition was the $13.7 billion deal to acquire Whole Foods in 2017.
The lawsuit mentions that Amazon has already paid around $1.7 billion to the three launch providers for the project, including $585 million directly to Blue Origin. The suit also notes that the company has yet to launch a prototype of its Kuiper satellite into orbit.
Amazon stated earlier this year that it would begin mass production of the satellites later this year and conduct beta tests with commercial customers in 2024. The deployment target for 2024 would keep Amazon on track to fulfill a regulatory mandate from the FCC to launch half of its entire Kuiper network of 3,236 satellites by 2026.
The pension fund seeks unspecified damages and attorney fees, according to a lawsuit filed on August 28 in the Delaware Chancery Court.