6 ms·

Pension fund sues Jeff Bezos and Amazon for not using Falcon 9 rockets

50 points by pinewurst 3y ago

philwelch 3y ago
I’ve been wondering if this would happen. The deal always struck me as obvious self-dealing.
_8j50 3y ago
Amazon can just claim that they were prioritizing the long term profitability of the company or considering a deal with spacex too risky, given musk's competition with bezos since musk can introduce delays and issues for amazon and because bezos can get amazon long term savings. Companies even have loss-leader products where short term losses are accepted.
- Mountain_Skies 3y ago
  Amazon's Board can't claim any of that because it wasn't discussed at the Board meeting where the decision was made. They spent about forty minutes on the decision, the second largest investment the company has ever made. Unless the Board wants to commit perjury, they have to tell the court the truth. A court of law isn't the place for the PR department to make up a bunch of ass covering spin.
  - sigmoid10 3y ago
    >A court of law isn't the place for the PR department to make up a bunch of ass covering spin. Not for the HR people, but most certainly for the lawyers. Do you really think they will just bend over and say "whoopsie, totally our fault"?
  - _8j50 3y ago
    Does the law require them to explicitly state their reason or even discuss it at all? It's perjury if it is a lie, but the very reason the plantiff's claim is behind thr decision, that is what I am saying is their defense. Yes, bezos and musk compete, it's a business and you need to trust your business partners. No business will partner with another buisnedd they believe does not have their best interests. This is so obvious, one can claim it is implied in the decision making process. Even if spacex does what is needed, the kuiper project alone is not what the board oversees, it is the entire company and its future profitablity to share holders.
    - philwelch 3y ago
      > Even if spacex does what is needed, the kuiper project alone is not what the board oversees, it is the entire company and its future profitablity to share holders. That calls more into question than you would think. What is the business case for Project Kuiper in the first place, other than the self-dealing? > Yes, bezos and musk compete, it's a business and you need to trust your business partners. No business will partner with another buisnedd they believe does not have their best interests. Apple and Samsung compete, but Apple routinely buys Samsung parts for their products when Samsung parts are obviously the best choice that is available at scale. They don’t buy parts from a side business Tim Cook set up that has failed to produce a single part, and if they did, they would face the exact same type of lawsuit. But it’s worse than that because Apple is already in the business of making their products. They aren’t launching a new product category the way Amazon is with Kuiper.
      - _8j50 3y ago
        Let me use your apple example, apple found out the hard way that paying its competitors us against its interest so they make their own M1/2 SoC now, their samsung dependency on memory chips is because there is no option. They do everything in house where possible, they line to control as much if the supply chain as possible. Amazon is launching a new product, so they can calculate short term losses and plan for long term success. Initial committments like spacex would be difficult to move away from. Total cost of anything is worse if you have to migrate from it anyways. If they know they will find it cheaper to use blue origin in the long run then the only decision is what to use that is cheapest to move away from down the road. The bottom line is, the board and company of amazon has no fiduciary responsibility to pursue short term profits. They can only do wrong if it can be proven that they made a decision that is against the proftiability of the company intentionally or out of gross negligence.
        philwelch 3y ago
        > [Apple’s] samsung dependency on memory chips is because there is no option Which is also the state of the launch market at this point. OneWeb uses SpaceX launches as well. Apple also buys screens and batteries from Samsung, by the way. > They do everything in house where possible, they line to control as much if the supply chain as possible. Apple is more vertically integrated than a lot of companies, but this is not true. They don’t even do their own manufacturing—Foxconn does it. The only parts they do in house are the parts that they have a competitive advantage on, which at this point includes chip and systems design and software development. > Amazon is launching a new product This is actually more incriminating, not less. Amazon may argue (not convincingly, in my opinion) that partnering with SpaceX would be a bad business decision. But even if that’s true, it doesn’t make partnering with Blue Origin a good business decision when they have the alternative of not launching this product in the first place. > Initial committments like spacex would be difficult to move away from. How? There’s no inherent lock-in with satellite launch. If you contract with SpaceX for n launches, you’re not obligated to continue using them afterwards. Many if not most SpaceX customers have also used other launch providers. > If they know they will find it cheaper to use blue origin in the long run They know no such thing. Blue Origin has faced years of delays and has never made an orbital launch. > They can only do wrong if it can be proven that they made a decision that is against the proftiability of the company intentionally or out of gross negligence. And in this case, there is an obvious ulterior motive at play along with virtually no sensible business case for the decision they ended up making.
- user_named 3y ago
  It's that easy? Thanks.
  - _8j50 3y ago
    This is the comments section where people state their opinions. I'd say you're welcome but you don't sound like Jeff Bezos to me. Either engage in meaningful discourse or keep your passive agressive snark to yourself.
- philwelch 3y ago
  Starlink primarily exists because Falcon 9 has so much launch capacity they have exceeded current market demand and need to find a way to monetize it themselves. SpaceX’s primary industry is launch services and they have no incentive to do a bad job at it. Furthermore, this totally misses the question of why Amazon is entering this market in the first place, other than as a mechanism for Jeff Bezos to move large sums of money from Amazon to Blue Origin. If the less risky version of your business plan actually entails relying on a company that has never reached orbit and still struggles to make suborbital hops after a longer development period than SpaceX has existed as a company, you could just stay out of that business.
  - extraduder_ire 3y ago
    > relying on a company that has never reached orbit and still struggles to make suborbital hops This is sadly far too common in most rocketry endeavours. spacex (any maybe some of the "private" chinese companies) are really outliers in this industry. The timelines are absurdly ambitious, and by the time you're doing regular flights the company you want to contract may have merged/split/been hit by sanctions three or four times.
entropicgravity 3y ago
The pension fund should have known better than to invest in Amazon in the first place. Now they're just crying over spilled milk.
gmerc 3y ago
Let’s not forget the other big tech giant who had their satellite burn up on Elons launch vehicle
- zamadatix 3y ago
  Without looking at which company that was it's safe to say we probably should forget as the Falcon 9 has been the most reliable rocket ever built.
  - euroderf 3y ago
    I had to look it up but yes, according to ESA the Soyuz scores a mere 98%.
    - deleted 3y ago
      [deleted]
- jwells89 3y ago
  They’ve had around 220 successful launches since then, giving the Falcon 9 a success rate of 99.21%, and that number improves every other week or so as they continue to launch. There are reasons to not launch SpaceX but lack of reliability isn’t among them.
  - extraduder_ire 3y ago
    I think zuck was more annoyed that they did that testfire with the rocket fully stacked, or more specifically that the big PR move he wanted to do failed. This is why you should buy launch insurance though.
perilunar 3y ago
Somewhat ironic, considering that SpaceX is a private company because (according to Musk) its long term goals conflict with the short term demands of shareholders.
scotty79 3y ago
Management of companies that are on the stockmarket is completely backwards. They should have zero responsibility to their shareholders. Stockmarket is a casino and shares are tokens. When you hold tokens you can't spin the rulete wheel.

50 points by pinewurst 3y ago

I’ve been wondering if this would happen. The deal always struck me as obvious self-dealing.

Amazon can just claim that they were prioritizing the long term profitability of the company or considering a deal with spacex too risky, given musk's competition with bezos since musk can introduce delays and issues for amazon and because bezos can get amazon long term savings. Companies even have loss-leader products where short term losses are accepted.

Mountain_Skies 3y ago
Amazon's Board can't claim any of that because it wasn't discussed at the Board meeting where the decision was made. They spent about forty minutes on the decision, the second largest investment the company has ever made. Unless the Board wants to commit perjury, they have to tell the court the truth. A court of law isn't the place for the PR department to make up a bunch of ass covering spin.
- sigmoid10 3y ago
  >A court of law isn't the place for the PR department to make up a bunch of ass covering spin. Not for the HR people, but most certainly for the lawyers. Do you really think they will just bend over and say "whoopsie, totally our fault"?
- _8j50 3y ago
  Does the law require them to explicitly state their reason or even discuss it at all? It's perjury if it is a lie, but the very reason the plantiff's claim is behind thr decision, that is what I am saying is their defense. Yes, bezos and musk compete, it's a business and you need to trust your business partners. No business will partner with another buisnedd they believe does not have their best interests. This is so obvious, one can claim it is implied in the decision making process. Even if spacex does what is needed, the kuiper project alone is not what the board oversees, it is the entire company and its future profitablity to share holders.
  - philwelch 3y ago
    > Even if spacex does what is needed, the kuiper project alone is not what the board oversees, it is the entire company and its future profitablity to share holders. That calls more into question than you would think. What is the business case for Project Kuiper in the first place, other than the self-dealing? > Yes, bezos and musk compete, it's a business and you need to trust your business partners. No business will partner with another buisnedd they believe does not have their best interests. Apple and Samsung compete, but Apple routinely buys Samsung parts for their products when Samsung parts are obviously the best choice that is available at scale. They don’t buy parts from a side business Tim Cook set up that has failed to produce a single part, and if they did, they would face the exact same type of lawsuit. But it’s worse than that because Apple is already in the business of making their products. They aren’t launching a new product category the way Amazon is with Kuiper.
    - _8j50 3y ago
      Let me use your apple example, apple found out the hard way that paying its competitors us against its interest so they make their own M1/2 SoC now, their samsung dependency on memory chips is because there is no option. They do everything in house where possible, they line to control as much if the supply chain as possible. Amazon is launching a new product, so they can calculate short term losses and plan for long term success. Initial committments like spacex would be difficult to move away from. Total cost of anything is worse if you have to migrate from it anyways. If they know they will find it cheaper to use blue origin in the long run then the only decision is what to use that is cheapest to move away from down the road. The bottom line is, the board and company of amazon has no fiduciary responsibility to pursue short term profits. They can only do wrong if it can be proven that they made a decision that is against the proftiability of the company intentionally or out of gross negligence.
      - philwelch 3y ago
        > [Apple’s] samsung dependency on memory chips is because there is no option Which is also the state of the launch market at this point. OneWeb uses SpaceX launches as well. Apple also buys screens and batteries from Samsung, by the way. > They do everything in house where possible, they line to control as much if the supply chain as possible. Apple is more vertically integrated than a lot of companies, but this is not true. They don’t even do their own manufacturing—Foxconn does it. The only parts they do in house are the parts that they have a competitive advantage on, which at this point includes chip and systems design and software development. > Amazon is launching a new product This is actually more incriminating, not less. Amazon may argue (not convincingly, in my opinion) that partnering with SpaceX would be a bad business decision. But even if that’s true, it doesn’t make partnering with Blue Origin a good business decision when they have the alternative of not launching this product in the first place. > Initial committments like spacex would be difficult to move away from. How? There’s no inherent lock-in with satellite launch. If you contract with SpaceX for n launches, you’re not obligated to continue using them afterwards. Many if not most SpaceX customers have also used other launch providers. > If they know they will find it cheaper to use blue origin in the long run They know no such thing. Blue Origin has faced years of delays and has never made an orbital launch. > They can only do wrong if it can be proven that they made a decision that is against the proftiability of the company intentionally or out of gross negligence. And in this case, there is an obvious ulterior motive at play along with virtually no sensible business case for the decision they ended up making.
user_named 3y ago
It's that easy? Thanks.
- _8j50 3y ago
  This is the comments section where people state their opinions. I'd say you're welcome but you don't sound like Jeff Bezos to me. Either engage in meaningful discourse or keep your passive agressive snark to yourself.
philwelch 3y ago
Starlink primarily exists because Falcon 9 has so much launch capacity they have exceeded current market demand and need to find a way to monetize it themselves. SpaceX’s primary industry is launch services and they have no incentive to do a bad job at it. Furthermore, this totally misses the question of why Amazon is entering this market in the first place, other than as a mechanism for Jeff Bezos to move large sums of money from Amazon to Blue Origin. If the less risky version of your business plan actually entails relying on a company that has never reached orbit and still struggles to make suborbital hops after a longer development period than SpaceX has existed as a company, you could just stay out of that business.
- extraduder_ire 3y ago
  > relying on a company that has never reached orbit and still struggles to make suborbital hops This is sadly far too common in most rocketry endeavours. spacex (any maybe some of the "private" chinese companies) are really outliers in this industry. The timelines are absurdly ambitious, and by the time you're doing regular flights the company you want to contract may have merged/split/been hit by sanctions three or four times.

entropicgravity 3y ago

The pension fund should have known better than to invest in Amazon in the first place. Now they're just crying over spilled milk.

gmerc 3y ago

Let’s not forget the other big tech giant who had their satellite burn up on Elons launch vehicle

zamadatix 3y ago
Without looking at which company that was it's safe to say we probably should forget as the Falcon 9 has been the most reliable rocket ever built.
- euroderf 3y ago
  I had to look it up but yes, according to ESA the Soyuz scores a mere 98%.
  - deleted 3y ago
    [deleted]
jwells89 3y ago
They’ve had around 220 successful launches since then, giving the Falcon 9 a success rate of 99.21%, and that number improves every other week or so as they continue to launch. There are reasons to not launch SpaceX but lack of reliability isn’t among them.
- extraduder_ire 3y ago
  I think zuck was more annoyed that they did that testfire with the rocket fully stacked, or more specifically that the big PR move he wanted to do failed. This is why you should buy launch insurance though.

perilunar 3y ago

Somewhat ironic, considering that SpaceX is a private company because (according to Musk) its long term goals conflict with the short term demands of shareholders.

scotty79 3y ago

Management of companies that are on the stockmarket is completely backwards. They should have zero responsibility to their shareholders. Stockmarket is a casino and shares are tokens. When you hold tokens you can't spin the rulete wheel.