Amazon Suspected Of Foul Play, Invest In Startups To Steal Their Secrets And Then Crush Them

According to a story published on The Wall Street Journal, Amazon takes advantage of its startup investment to steal ideas from smaller companies and then make its own products from what it stole.

The newspaper has met with lots of startup investors, advisers, and founders, who accused Amazon of investing in their companies just to make competing products later. What comes next is Amazon’s products crushed their competitors from smaller companies.

This has been going on for a long time and one example of Amazon’s alleged wrongdoing is LivingSocial, a website for deals. The startup told The Wall Street Journal that first, Amazon acquired 30% of the company’s stakes and then requested data and hired away LivingSocial’s employees. It even contacted the startup’s clients with promises of better deals.

Another alleged victim of Amazon is Nucleus, a startup specialized in home video communication devices. After purchasing stakes of the startup and gained access to its financials and plans, eight months later, the e-commerce giant launched the Echo Show with similar functions.

After Echo Show was released, Nucleus’s sales declined sharply and the startup had to switch to the healthcare sector. According to the report, Amazon later paid the startup $5 million but didn’t admit stealing ideas from it.

Some other companies like Ubi, Vocalife, and DefinedCrowd said the same thing about the eCommerce giant’s scheme. First, it invested in these startups and then launched its own products with similar functions and technology.

The inevitable consequences these smaller companies face are downsizing or closing as they can no longer compete with the new products.

In answer to these accusations, Amazon’s representative said they had never committed these wrongdoings.

The spokesperson said Amazon had a 26-year history of pioneering many new features, sometimes even creating a whole new category, from AWS, Echo, to amazon.com. Not many companies can rival its track record in innovations. The representative also told Business Insider that any disputes about intellectual properties would be resolved in courts.

This report came when Amazon is facing anti-competitive accusations. An antitrust hearing is being held at we speak by the House Judiciary Committee with the presence of Jeff Bezos, the company’s CEO, and some other tech executives.

The Federal Trade Commission is investigating hundreds of Amazon’s acquisitions to see if the e-commerce giant truly uses investments to get access to other companies’ tech and trade secrets.

The Commission has contacted some of Amazon’s sellers to verify the truth of The Wall Street Journal’s April report, which accuses the company of using third-party vendors’ data to build competing products.

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