WSJ: Amazon Met with Startups About Investing, then Launched Competing Products

Amazon and Blue Origin founder Jeff Bezos provides the keynote address at the Air Force Association's Annual Air, Space & Cyber Conference in Oxen Hill, MD, on September 19, 2018. (Photo by Jim WATSON / AFP) (Photo credit should read JIM WATSON/AFP/Getty Images)
JIM WATSON/AFP/Getty Images

A recent report in the Wall Street Journal alleges that e-commerce giant Amazon met with small startups seeking investments to gain insight into their products before later launching its own competing products.

A recent report from the Wall Street Journal titled “Amazon Met With Startups About Investing, Then Launched Competing Products,” outlines how the e-commerce giant Amazon set up meetings with startup firms to discuss their products with the pretense of potentially investing in the companies, only later to launch competing products in similar markets.

The WSJ writes that when Amazon’s venture-capital fund invested in DefinedCrowd Corp. it gained access to the tech startup’s finances along with other confidential information. Four years later, Amazon’s cloud-computing unit launched an artificial intelligence product that does exactly what DefinedCrowd does, according to DefinedCrowd founder and CEO Daniela Braga.

The WSJ writes:

The new offering from Amazon Web Services, called A2I, competes directly “with one of our bread-and-butter foundational products” that collects and labels data, said Ms. Braga. After seeing the A2I announcement, Ms. Braga limited the Amazon fund’s access to her company’s data and diluted its stake by 90% by raising more capital.

Ms. Braga is one of more than two dozen entrepreneurs, investors and deal advisers interviewed by The Wall Street Journal who said Amazon appeared to use the investment and deal-making process to help develop competing products.

Amazon claims that the company does not use confidential information that companies share with it when building competing products. Many, however, believe that Amazon regularly takes advantage of startups in order to gain insight into their products.

Jeremy Levine, a partner at venture-capital firm Bessemer Venture Partners, commented: “They are using market forces in a really Machiavellian way. It’s like they are not in any way, shape or form the proverbial wolf in sheep’s clothing. They are a wolf in wolf’s clothing.”

According to former Amazon employees, the company is so focused on growth and its innovation capabilities are so vast that it often can’t hold back from investing in new technologies, even when those technologies compete with startups that the firm has already invested in.

The WSJ writes:

Drew Herdener, an Amazon spokesman, said that “for 26 years, we’ve pioneered many features, products, and even whole new categories. From amazon.com itself to Kindle to Echo to AWS, few companies can claim a record for innovation that rivals Amazon’s. Unfortunately, there will always be self-interested parties who complain rather than build. Any legitimate disputes about intellectual property ownership are rightly resolved in the courts.”

In February, the Federal Trade Commission ordered five large technology companies, including Amazon, to provide details on certain investments and acquisitions from 2010 through 2019 to determine whether any of the deals were anticompetitive. The FTC declined to comment on the status of that review.

Read the full report at the Wall Street Journal here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or contact via secure email at the address lucasnolan@protonmail.com

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