How Amazon Crushed Startups By Investing In Them To Steal Proprietary Information For Launching Competitors

Amazon is one if the most successful companies in the world, but could this success be a result of stealing ideas from others and selling them in the market as its own? Amazon is being investigated for crushing Startups by investing in them to steal their proprietary information and business ideas for launching competitors.

  • A new report suggests that Amazon steals product ideas
  • The report is from the companies from which Amazon purchased stakes
  • As an example, Amazon made an investment in Nucleus, just to launch echo devices in the end that competed with the actual product
  • Amazon’s spokesperson said that “any legitimate disputes about intellectual property ownership are rightly resolved in the courts”
  • As of now, Amazon is facing antitrust scrutiny from US Congress and the Federal Trade Commission
  • CEO Jeff Bezos will testify before the House Judiciary Committee about the company’s business practices on Monday
How Amazon Crushed Startups
How Amazon Crushed Startups By Investing In Them To Steal Proprietary Information For Launching Competitors

Invest to Steal

In recent years, Amazon has invested in a lot of start-ups thus, gaining their proprietary information. This helps Amazon to crush smaller companies by launching similar products in the market that end up competing with the one’s the start-ups launched.

This was initially reported by The Wall Street Journal’s Dana Mattioli and Cara Lombardo. The journalists spoke with many founders, investors, and advisers, of different start-ups who said Amazon met with or invested in their companies, only with the sole motive of later building its own products that directly competed with the smaller company.

Owing to the popularity of Amazon, the Amazon-made products often went on to crush the competition and the smaller companies.

LivingSocial, a deals website in which Amazon took a 30% stake says that it began requesting the access to company’s data, it even hired away some of their employees and contacted LivingSocial’s clients offering them better deals.

Listing all that Amazon stole

The Echo Show, an Alexa-enabled device with a large video screen that Amazon launched was originally an idea of Nucleus. The Amazon Echo that was launched in the market was similar to products by DefineCrowd, Vocalife and Ubi.

Owing to this Amazon later resolved with Nucleus for $5 million but did not admit of doing any wrong.

Once crushed, the companies give up

As Amazon crushed the smaller companies, most of them gave up and closed.

“We ended up burning through our cash and ended up having to downsize most of the company,” Leor Grebler, the creator of the voice-operated speaker Ubi, an Echo predecessor, told The Wall Street Journal.

However, Amazon denied all of these claims saying that it does not use confidential information that companies share when Amazon invests.

“For 26 years, we’ve pioneered many features, products, and even whole new categories. From itself to Kindle to Echo to AWS, few companies can claim a track 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” an Amazon spokesperson told Business Insider.

Jeff Bezos to testify

The US House Judiciary Committee is holding an antitrust hearing on Monday at which Amazon CEO Jeff Bezos and other prominent tech executives will testify.

The Federal Trade Commission is also looking into all the acquisitions by Amazon and other tech firms to reach the conclusion of this matter and determine whether Amazon really gained any unfair advantages by investing in “nascent competitors.”

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