Amazon’s venture capital fund accused of investing in small companies just to steal their ideas
Jeff Bezos’ owned world’s biggest eCommerce firm is actually a predator! Amazon is reportedly using its venture capital arm to fund startups only to steal business ideas from them. Amazon is accused of investing in small firms to actually obtain information about products developed by them. The e-commerce retailer then uses this confidential information to launch its own service based on such data.
According to a report in the Wall Street Journal(Paywall), Amazon.com’s venture-capital fund invested in DefinedCrowd and gained access to the technology startup’s finances and other confidential information. Four years later the marketplace launched a similar artificial intelligence product that does almost exactly what DefinedCrowd does.
DefinedCrowd founder and CEO Daniela Braga has accused Amazon of stealing their concept to launch its own product. Amazon recently launched a new Amazon Web Services (AWS) product called A2I. DefinedCrowd CEO says that it is completely based on their product and competes directly with them. And all this under the garb of venture capital funding.
Another company that suffered a similar fate was LivingSocial. LivingSocial officials met with Amazon’s venture capital firm to discuss a potential investment. At the end of the talks, Amazon purchased 30 percent of LivingSocial equity. After buying the share in LivingSocial, Amazon requested access to proprietary LivingSocial data. In a few months, Amazon started reaching out to its own clients offering better deals for similar products.
Even Amazon’s Echo seems to have been developed using this predatory thieving. A company that built Ubi, a smart speaker was in talks with Amazon for seed funding. The Ubi officials met with Amazo several times to discuss funding and concepts. It was just a matter of days before Amazon launched a similar product to Ubi- Amazon’s Echo. Due to the Echo launch, Ubi has all but disappeared.
WSJ report says that many startup founders claimed that after Amazon launched rival products their businesses collapsed. Some say they were being forced to downsize their companies due to Amazon’s competition.
Amazon has refused to comment on the predatory nature of its venture capital fund. Amazon says that such funding meetings are confidential in nature. Amazon, however, added that information obtained from such meetings is not used to build competing products, noting that any such claims are typically resolved in court.
“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 track record for innovation that rivals Amazon’s,” an Amazon spokesperson told Business Insider. “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.”
While court decisions may take a long time and many of these startups are too small to fight with a giant like Amazon armed with a battery of A-list lawyers, it is answerable to the US anti-trust body which it will be facing next week. The Amazon CEO, Jeff Bezos will have to testify in the official hearing scheduled for Monday in front of the House Judiciary Committee.