The delays facing Amazon’s satellite internet system, Project Kuiper, has prompted a group of shareholders to sue the company for allegedly snubbing SpaceX as a launch provider.
The lawsuit comes from the Cleveland Bakers and Teamsters Pension Fund, which holds shares in Amazon. SpaceNews reports the group filed a complaint in Delaware’s Court of Chancery that alleges Amazon’s board members “breached their most basic fiduciary responsibilities” when it came to picking the launch providers for Project Kuiper, which will span 3,236 satellites.
The pension fund argues that Amazon’s board should have considered SpaceX as a launch provider, given the company’s successful track record with transporting satellites. But Amazon’s board allegedly didn’t. Instead, it awarded the Project Kuiper contracts to Arianespace, United Launch Alliance and Blue Origin, which Amazon founder Jeff Bezos owns.
The problem is that all three companies continue to face delays with their rockets, which is stalling progress on Project Kuiper. Amazon must launch half of the satellite system by July 30, 2026, or risk losing its FCC license to operate the satellite network.
“In the face of SpaceX’s proven reliability and cost advantages, Bezos-led Amazon’s decision to not even consider SpaceX as a launch provider illustrates the glaring conflict of interest Bezos’ affiliation with both Amazon and Blue Origin presented,” the lawsuit claims.
The complaint goes on to blame Bezos’s personal rivalry with SpaceX’s CEO Elon Musk for why Amazon’s board allegedly awarded the contract to less-proven and costly launch providers. In addition, SpaceX operates its own rival satellite internet system called Starlink, which has faced resistance from Amazon in FCC filings.
“In stark contrast to the constant setbacks that Amazon’s three chosen suppliers have suffered, SpaceX has continued to thrive since the Board approved the Final LSAs (launch services agreement)," the lawsuit adds. "SpaceX accounted for 66% of customer flights from American 69 launch sites in 2022, and a dominant 88% of such flights in the first six months of 2023."
The pension fund is now demanding the court force Amazon to pay up in damages for allegedly breaching its fiduciary duties. In addition, it wants the company’s board to give up any profits it made by awarding the contracts to Blue Origin, United Launch Alliance and Arianespace.
However, Amazon is dismissing the allegations. “The claims in this lawsuit are completely without merit, and we look forward to showing that through the legal process,” an Amazon spokesperson said.
In the meantime, the first prototype satellites for Project Kuiper are likely scheduled to launch this Q4 following a delay with United Launch Alliance's Vulcan Centaur rocket. Amazon is aiming to start the first customer trials for Project Kuiper next year. But the company has some serious catching up to do with SpaceX's Starlink system, which already has over a million users.