Amazon.com, Inc. (NASDAQ:AMZN) has been investing in startups only to turn around and launch competing products. This is according to a new report by The Wall Street Journal’s, Dana Mattioli and Cara Lombardo. The journal has listed multiple cases where the e-commerce giant invested in fledging companies, gained access to financial data and internal operations and launched competing products.
Amazons taking advantage of its huge financial base
The report is a result of an interview from various founders, investors, and advisors. Dues to its huge financial base, Amazon goes on to crush the competition. A good example is Nucleus, a home video communication startup in which Amazon’s Alexa Fund invested. Eight months after the investment, Amazon launched its Echo Show powered by Alexa. Amazon settled the case out of court after paying $5 million. The startup has since shifted to producing medical devices.
Amazon acquired a 30% stake in Groupon-rival LivingSocial and started poaching employees, demanded access to data, and began offering better competing deals to clients. Ubi, from which Amazon borrowed its Echo speaker with a voice-powered personal assistant, claimed that e-commerce started launching competing products after investing in the startup. “We ended up burning through our cash and ended up having to downsize most of the company,” said Leor Grebler, who created the voice-operated speaker Ubi, an Echo predecessor.
Amazons deny claims of launching competing products
In defense, Amazon denied using confidential information shared by startups to create competing products. An Amazon spokesperson said the company pioneered many products, and very few companies can claim track for innovation that rivals its own. He further blamed “self-interested” parties who he says complain rather than create. He further notes that the company has a clear process for solving disputes involving intellectual property ownership.
This report comes in the wake of increased scrutiny on Amazon’s potential anticompetitive business practices. Amazon CEO Jeff Bezos is already among other prominent tech executives that are scheduled to testify before the House Judiciary Committee in an antitrust hearing.
Amazon is also under investigation by the Federal Trade Commission, which is investing the company and several other tech firms in finding out if they gained any unfair advantages from hundreds of acquisitions, many of them involving startups.