Tech giant Amazon (NASDAQ: AMZN) suffered a setback on Friday after shareholder Cleveland Bakers and Teamsters Pension Fund filed a lawsuit against founder Jeff Bezos and the Amazon board, according to Reuters. The lawsuit alleges that the board awarded contracts for the Project Kuiper satellite project to Bezos’ space company, Blue Origin, and did not consider rival Elon Musk‘s SpaceX as an alternative launch provider.
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Amazon’s Project Kuiper plans to make broadband internet available in remote regions through a network of over 3,000 satellites, similar to Musk’s Starlink. The lawsuit claims that the “launch contracts were the second-largest capital expenditure in Amazon’s history at the time.”
Moreover, the lawsuit states that Amazon has paid around $1.7 billion so far to the three launch providers in the project. This includes $585 million to Blue Origin directly, even as the company has not launched a prototype of its Kuiper satellite into orbit so far.
An Amazon spokesperson told Reuters, “The claims in this lawsuit are completely without merit, and we look forward to showing that through the legal process.”
The pension fund’s lawsuit seeks unspecified damages and legal fees.
Analysts remain bullish on AMZN stock with a Strong Buy consensus rating based on 40 Buys and one Hold.