Australia markets close in 2 hours 13 minutes

    +110.30 (+1.60%)
  • ASX 200

    +103.10 (+1.54%)

    -0.0023 (-0.35%)
  • OIL

    -0.50 (-0.58%)
  • GOLD

    -3.40 (-0.20%)

    +830.31 (+2.74%)
  • CMC Crypto 200

    +12.98 (+2.91%)

    -0.0008 (-0.12%)

    -0.0028 (-0.25%)
  • NZX 50

    +61.29 (+0.55%)

    +352.81 (+3.14%)
  • FTSE

    +177.70 (+2.57%)
  • Dow Jones

    +825.43 (+2.80%)
  • DAX

    +461.00 (+3.78%)
  • Hang Seng

    +848.84 (+4.97%)
  • NIKKEI 225

    +93.76 (+0.35%)

Bezos v. Musk: The high-stakes legal disputes between the world’s two richest people

·17-min read

The spectacle of public sniping between the world’s two richest men, as they compete to shoot ever-larger rockets ever deeper into space, has been an irresistible one for media observers.

In recent months, SpaceX and Tesla (TSLA) CEO Elon Musk (net worth: $224 billion, per Bloomberg) has traded barbs with Amazon (AMZN) and Blue Origin founder Jeff Bezos (net worth: $189 billion) on Twitter, in media forums, and in legal filings that have ranged from sharp to snarky to—in Musk’s case—vulgar.

“Can’t get it up (to orbit) lol ,” Musk tweeted in April when NASA passed over Bezos’ Blue Origin for a multibillion-dollar contract. Though he has mostly demurred on Twitter, Bezos unloaded both barrels at Musk last month—through a surrogate, at least—in an Amazon filing before the Federal Communications Commission. “Whether it is launching satellites with unlicensed antennas,” his company’s satellite unit wrote, “launching rockets without approval, building an unapproved launch tower, or re-opening a factory in violation of a shelter-in-place order, the conduct of SpaceX and other Musk-led companies makes their view plain: rules are for other people.”

This article will peer beneath the insults to explain the facts and law surrounding the two high-stakes disputes that are currently generating most of the sparks between the men. One involves competition between SpaceX and Blue Origin for multibillion-dollar NASA Artemis contracts to take the first woman and first person of color to the moon by 2024—the first human moon landings in a half century.

The other is a tussle before the FCC over SpaceX’s attempt to upgrade its envisioned, next-generation 30,000-satellite Starlink network to provide high-speed internet services throughout the globe. Amazon’s Project Kuiper, which seeks to set up a rival such network of 3,236 satellites, has opposed the amendment. In response to Amazon’s opposition, Musk tweeted: “Filing legal actions against SpaceX is *actually* [Bezos’] full-time job.” (In July, Bezos stepped down as Amazon’s CEO, but remains actively involved in the company as its executive chairman.)

SpaceX representatives did not respond to five inquiries for this article. Spokespersons for Blue Origin and Amazon each declined comment.

A win for SpaceX—and dashed hopes for Blue Origin

The weightier dispute is the one between Blue Origin and SpaceX over the NASA contracts. The competition began in October 2019, when NASA solicited bids for the first phase of a project to provide a Human Landing System for its Artemis Program, which plans lunar landings in 2024 and 2026 and, eventually, the establishment of a sustainable base on the moon.

In April 2020, NASA awarded development contracts to three bidders—Blue Origin, SpaceX, and Dynetics (a nearly half-century-old defense contractor owned by Leidos, a scientific and engineering firm in Reston, Va.). Each bidder was awarded funds to develop a proposal to accomplish the 2024 moon landing. Blue Origin—the lead contractor for the “Blue Origin National Team,” which included Lockheed Martin (LMT), Northrop Grumman, and The Charles Stark Draper Laboratory (a nonprofit R&D group that was once part of MIT)—received the biggest package of development funds: $579 million.

Artemis represented a huge opportunity for Blue Origin to gain credibility, experience, and revenue. Regardless of Bezos’ big-foot, arguable monopoly status in the realm of e-commerce, his Blue Origin venture is still a cheeky upstart in the aerospace market, which is still dominated by the likes of Lockheed, Boeing, and now SpaceX.

Billionaire American businessman Jeff Bezos wears goggles owned by Amelia Earhart which he carried into space at a post-launch press conference after he flew on Blue Origin's inaugural flight to the edge of space, in the nearby town of Van Horn, Texas, U.S. July 20, 2021.   REUTERS/Joe Skipper     TPX IMAGES OF THE DAY
Billionaire American businessman Jeff Bezos wears goggles owned by Amelia Earhart which he carried into space at a post-launch press conference after he flew on Blue Origin's inaugural flight to the edge of space, in the nearby town of Van Horn, Texas, U.S. July 20, 2021. REUTERS/Joe Skipper

Blue Origin, based in Kent, Wash., was founded in 2000, two years before Hawthorne, Calif.-based SpaceX (formally, Space Exploration Technologies). Nevertheless, SpaceX has since jumped out to an enormous lead by almost any measure. As a closely held company, Blue Origin’s value is unknown, but it’s hard to imagine that it approaches the $100 billion estimate reported for SpaceX, also private, earlier this month. (Richard Branson’s publicly owned space-tourism company, Virgin Galactic, has a market cap of about $6 billion.)

Blue Origin’s greatest achievements to date—certainly nothing to sniff at—are its two manned, autonomous flight missions using reusable rocket boosters. Bezos and his brother were among the four civilians who flew aboard the first flight in July, while 90-year-old William Shatner—the original Captain Kirk from “Star Trek”—is scheduled to be among those aboard for the second flight this morning.

Still, these flights are just 10-minute suborbital jaunts to about 100 kilometers above the Earth’s surface—known as “the edge of space.” They allow mostly well-heeled civilians to experience weightlessness and briefly ponder the mysteries of black, starry skies.

In September, by contrast, SpaceX flew four civilians on a three-day orbital mission at heights of more than 575 kilometers. That accomplishment supplemented SpaceX’s 27 earlier docking missions to the International Space Station (orbiting at an altitude of 254 kilometers and traveling at 17,500 miles-per-hour), to which it has ferried cargo and, on two occasions, crews of astronauts. (Blue Origin has never launched an orbital flight; it hopes to make its first in Q4 2022.)

So the prospect of flying NASA astronauts to the moon was a big deal for Blue Origin. But those aspirations were rudely disrupted—if not definitively dashed—this past April. Though NASA had publicly planned to award phase-two Artemis contracts to two of the three winners of the 2020 development contracts (i.e., Blue Origin, SpaceX, and Dynetics), it ended up awarding just a single contract—to SpaceX—citing budgetary constraints.

If it was necessary to choose just one vendor, SpaceX certainly seems like the logical choice. NASA had rated its proposal slightly superior to Blue Origin’s (and much higher than that of Dynetics), while SpaceX’s price came in at less than half of Blue Origin’s (and less than a third of Dynetics’). SpaceX was asking $2.9 billion; Blue Origin, nearly $6 billion; Dynetics, north of $9 billion. (Dynetics declined comment except to say that it was “looking forward to . . . supporting NASA’s lunar mission” through a $41 million contract it was awarded last month, which also relates to the Human Landing System.)

SpaceX founder and chief engineer Elon Musk reacts during a post-launch news conference to discuss the SpaceX Crew Dragon astronaut capsule in-flight abort test at the Kennedy Space Center in Cape Canaveral, Florida, U.S. January 19, 2020. REUTERS/Joe Skipper     TPX IMAGES OF THE DAY
SpaceX founder and chief engineer Elon Musk reacts during a post-launch news conference to discuss the SpaceX Crew Dragon astronaut capsule in-flight abort test at the Kennedy Space Center in Cape Canaveral, Florida, U.S. January 19, 2020. REUTERS/Joe Skipper

If NASA’s single-source decision stands, SpaceX will have a seemingly insurmountable advantage in bidding for the third phase of the project, relating to the planned 2026 landing.

Blue Origin immediately filed a protest to the Government Accountability Office—prompting Musk’s mocking tweet about not “get[ting] it up (to orbit).” Dynetics protested, also.

Blue Origin had a range of complaints, but the key one was that NASA should have permitted the bidders to adjust their pricing given the changed budgetary circumstances, rather than just handing out a single award. (Congress passed the stingy budget in December 2020, a few weeks after bids were submitted and four months before NASA made its selection.) Single-source contracts are, not surprisingly, often disfavored in the government procurement realm, since they leave the government beholden to a single vendor. (NASA did not return inquiries seeking comment.)

On July 26, while its GAO protest was pending, Bezos issued an unusual “open letter” to NASA Administrator Bill Nelson. He offered to waive all payments to Blue Origin for “the current and next two government fiscal years up to $2 billion to get the program on track.” He’d cover all cost overruns, too, he added. He’d make up the difference from his own pocket. “I am honored to offer these contributions and grateful to be in a financial position to do so,” he wrote. (Bezos has said that he personally invests about $1 billion a year in Blue Origin.)

Four days later, the GAO rejected Blue Origin’s protest, affirming NASA’s single-source award to SpaceX. In his ruling, GAO general counsel Thomas H. Armstrong found that the solicitation had been clear from the start that the awards would be dependent on funding. Though two awards had been anticipated, NASA had made clear that it was free to award just one or, indeed, none, he wrote. (His 76-page decision did not mention Bezos’ offer to shave $2 billion off the price.)

Though the GAO ruling was a setback to Blue Origin, it also handed the company a new argument for appealing NASA’s decision to the next level: the Court of Federal Claims. The text of the decision revealed publicly for the first time that SpaceX had, in one respect, failed to comply with the terms of NASA’s solicitation.

Margarita Moilina of El Paso, TX, poses next to a mural depicting billionaire American businessman Jeff Bezos (C) and his brother Mark (L) one day before their launch on Blue Origin's inaugural flight to the edge of space, in the nearby town of Van Horn, Texas, U.S. July 19, 2021.   REUTERS/Joe Skipper
Margarita Moilina of El Paso, TX, poses next to a mural depicting billionaire American businessman Jeff Bezos (C) and his brother Mark (L) one day before their launch on Blue Origin's inaugural flight to the edge of space, in the nearby town of Van Horn, Texas, U.S. July 19, 2021. REUTERS/Joe Skipper

Specifically, NASA’s solicitation required that every launch contemplated by a bidder’s proposal—including launches of “supporting” spacecraft, like tanker vehicles—needed to be preceded, for safety reasons, by its own “flight readiness review,” or FRR. Though SpaceX’s proposal contemplated 16 separate launches—including 14 tanker vehicle launches—it had proposed only a single, overall FRR. NASA had given SpaceX the nod anyway, and then negotiated with SpaceX—after selection—to use three FRRs. That was more than the single one SpaceX had proposed, but still fewer than the 16 the solicitation seemed to require.

In his ruling, the GAO’s Armstrong conceded that SpaceX had violated the solicitation’s flight readiness review requirements. Nevertheless, he found that Blue Origin hadn’t been “prejudiced” because its own proposal had been structured differently, so dispensing with flight readiness reviews wouldn’t have shaved much off Blue Origin’s price.

In August, Blue Origin challenged the GAO ruling in the U.S. Court of Federal Claims, now raising both the single-source issue and SpaceX’s “non-compliance” with the FRR requirements, which, it argued, should have resulted in disqualification of SpaceX’s bid. (A month later, Musk jeered to tech journalist Kara Swisher at a Code conference, “You can’t sue your way to the moon.”)

‘Getting rid of competition is a huge, bad thing’

Charles Tiefer, a professor at the University of Baltimore Law School and author of a casebook on government contracting law, says he is sympathetic to both of Blue Origin’s arguments. Nevertheless, he says, he is skeptical that they will overcome the deference the Court of Federal Claims ordinarily gives the contract-awarding agency—in this case, NASA.

“The narrowing from an original demand for multiple vendors to having only one vendor” has “atrocious” consequences, Tiefer says in an interview. “Competition is the taxpayer’s best friend for getting value for taxpayer money. Getting rid of competition is a huge, bad thing.” He thinks NASA should have made two awards, negotiated with the bidders to accommodate the budgetary shortfall, and gone to Congress to ask for more.

Tiefer is also receptive to Blue Origin’s argument about SpaceX’s failure to comply with the terms of the solicitation. “SpaceX flagrantly violated the solicitation’s requirement of flight readiness review for every vehicle [launched],” he says. “And it’s hard to understand why NASA would enter into negotiations with SpaceX about the flight readiness reviews and not enter into negotiations with Blue Origin about price.”

That said, he predicts that the court will still defer to NASA. “NASA’s excuses, thin as they were, worked at the GAO and will quite possibly work at the Court of Federal Claims.”

The case is proceeding along a fast track, with Judge Richard A. Hertling pledging to rule by Nov. 1. In the event of a loss, Blue Origin could still appeal to the U.S. Court of Appeals for the Federal Circuit.

Given the stakes, however, Blue Origin isn’t putting all its eggs in the litigation basket. It’s also seeking help from Congress. A Senate bill, passed out of committee in May, would direct NASA to fund “not fewer than two entities” for the Human Landing System program. The company is also reportedly seeking more Congressional funding for the project, and NASA Administrator Bill Nelson has expressed optimism about eventually getting it.

A fight to deliver high-speed internet service anywhere

The billionaires’ other dust-up is over another front where Musk’s company currently enjoys a lengthy lead over Bezos’: their competing plans to set up a “constellation” of low-orbit satellites to deliver high-speed internet service anywhere on the planet.

Musk apparently has grand plans for SpaceX’s Starlink satellite-based internet network. According to documents leaked to the Wall Street Journal in 2017, SpaceX then envisioned tens of billions in profit from the service by 2025. As recently as February, Musk tweeted that SpaceX would spin off Starlink in an IPO as soon as “we can predict cash flow reasonably well.”

Musk’s first-generation Starlink network is now up and running in beta, providing service to 100,000 subscribers in 14 countries. The company has thus far launched into orbit more than 1,700 of the nearly 4,400 satellites that have already been approved by the FCC.

In July 2020, Amazon’s Project Kuiper won approval to assemble a competing constellation of 3,236 low-orbit satellites—though it has yet to launch any yet.

Both Kuiper and Starlink are developing constellations of non-geostationary orbit, or NGSO, satellites. Longstanding satellite networks, like those run by EchoStar and Viasat, use geostationary satellites, which fly higher above the Earth’s surface. Among an NGSO network’s potential advantages, explains Tim Farrar, a satellite and telecom consultant who runs TMF Associates, is that it may suffer less from “latency,” or signal lag, than geostationary satellite systems.

Not one to rest on its laurels, in May 2020 SpaceX sought approval for a “next-generation” Starlink constellation with an eye-popping 30,000 NGSO satellites. Then, this past August, it filed an “amendment” to that proposal with the FCC—which is what triggered the other recent contretemps between Musk and Bezos.

Although SpaceX is not asking for any more satellites—nor for any additional FCC-approved spectrum—it does now want the FCC to greenlight two alternative configurations for its 30,000 envisioned satellites—i.e., the precise array of locations and orientations planned for each orb. SpaceX would use one configuration if it continues launching satellites with its existing Falcon 9 rocket, and the other if it can get its larger envisioned rocket, called Starship, ready in time. Starship could place many more satellites into orbit per launch than can Falcon 9.

SpaceX’s submission reasoned that having the FCC pre-approve the alternative configurations would ensure that its network could become a reality as soon as possible—bringing the benefits of high-speed internet to “the most remote corners and Polar Regions of the country that too often get overlooked and left behind.”

Amazon’s Project Kuiper protested four days later. (Soon thereafter, so did two other competitors: Viasat and EchoStar Satellite Services/Hughes Network Systems, each raising basically the same objections as Amazon.)

Amazon argued that SpaceX, by asking for approval of two alternative configurations, was violating two FCC rules. Those, the commission has explained in the past, are designed to spare FCC staff from having to vet “speculative” proposals; to force satellite operators to hone their plans into “comprehensive” applications; and to spare rival operators the necessity of planning to avoid interference with phantom satellite configurations that never get deployed.

SpaceX’s approach “doubles the technical effort of every operator faced with the task of reviewing the interference and orbital debris concerns raised by SpaceX’s amendment,” wrote Amazon’s lawyer.

SpaceX fired back a few days later. It characterized Amazon’s objection as the “latest in its continuing effort to slow down competition”; a “delay tactic”; an “obstructionist tactic”; and “a continuation of efforts by the Amazon family of companies to hinder competition.” It also claimed that its own filing broke no FCC rules and simply “provided more information than necessary.” (The next day, Musk fired off the tweet about Bezos’ “full-time job” now being to file “legal actions against SpaceX.”)

Farrar, the satellite and telecom consultant, believes SpaceX is, in fact, seeking special treatment. “What they’re asking for is not something someone has been allowed to do in the past,” he says. “SpaceX has gotten away with a lot for many years,” he adds. “It’s common for them to push the boundaries in terms of expecting to get preferential treatment from regulators.”

A billionaire underdog

In both the Starlink dispute and the NASA bid protest context, Musk has accused Bezos’ companies of litigiousness and anticompetitive conduct—the latter charge being an obvious pressure-point for Bezos, whose sprawling Amazon empire, with its $1.7 trillion market cap, has become a target of antitrust reform advocates.

Both charges seem largely tactical and rhetorical here, however. Bid protests and FCC challenges go with the territories in which all these companies operate, and Musk’s SpaceX has played the same games—effectively. SpaceX has brought at least five bid protests to either the GAO or the Court of Federal Claims over the years—against either the Air Force or NASA—as it muscled its way into aerospace markets formerly dominated by Boeing, Lockheed, and their formidable joint venture: the United Launch Alliance.

Similarly, according to a 13-page table Amazon sent to The Verge in September, over the past five years SpaceX has lodged more than 30 submissions with the FCC opposing rivals’ satellite-related plans.

Finally, as hard as it is to imagine Bezos as an underdog, that’s what his companies clearly are in these particular markets. The “anticompetitive” label doesn’t quite fit him here and, to the extent SpaceX is asking for special treatment from the FCC, it would be SpaceX that is competing unfairly.

On the other hand, Musk’s impatience with rules that do, necessarily, slow down the realization of technological progress strikes a resonant chord for many. Musk’s contempt for dotting regulatory i’s and crossing regulatory t’s might even be part of the reason he is so far out ahead of Bezos in his space ventures.

As Washington Post reporter Christian Davenport noted in his 2018 book, “The Space Barons,” Blue Origin and SpaceX have had markedly contrasting cultures since their inception. Blue Origin has always happily cast itself as the tortoise rather than the hare from Aesop’s fable. “Slow is smooth and smooth is fast,” Bezos likes to say, borrowing a U.S. Navy SEAL epigram. Blue Origin’s coat-of-arms shows a pair of turtles, and the company’s motto is Gradatim Ferociter—“step by step, ferociously.”

Musk’s SpaceX, by contrast, has embraced a pedal-to-the-metal culture. Its motto has been, according to Davenport, “Head down, plow through the line.”

So far, the hare has run up an enormous lead. It’s hard to foresee the point at which, tuckered out, he will hubristically lay down to take a nap, letting the tortoise plod past him to the finish line.

Aesop never met Elon Musk.

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit

Roger Parloff is a regular contributor to Yahoo Finance and has also been published in Yahoo News, The New York Times, ProPublica, New York Magazine, and, among others. He was formerly an editor-at-large at Fortune Magazine.

More from Roger:

Portrait of a 29-year-old billionaire: Can Sam Bankman-Fried make his risky crypto business work?

Dominion v. MyPillow Guy poses a stark test for America's libel laws

Dominion Voting official, in hiding, speaks out: 'This never ends for me'

The wild ride that made Rudy Giuliani, 'Kraken' lawyer Sidney Powell, and Fox News targets in the mother of all defamation cases

Nikola’s Trevor Milton left a trail of bitterness on his way to founding the electric car startup