‘Amazon uses investments to copy technology from start-ups’

A large number of start-ups have expressed dissatisfaction with Amazon’s practices, with the company appearing to be making investments and then releasing competing products. Amazon denies the claims.

The Wall Street Journal claims to have spoken to ‘more than two dozen’ start-ups who have had similar experiences with investments made by Amazon in their businesses. Some stories have been recorded in detail. For example, the example of DefinedCrowd, which developed a service based on artificial intelligence, after which Amazon came up with a service that functions almost in the same way a few years after making an investment.

The company Nucleus is also mentioned, which was working on a smart video assistant with support for Amazon’s Alexa voice service. Shortly after making an investment, Amazon came up with the Echo, a similar product. Nucleus tried to get redress from Amazon, but the latter states that the Echo was already in development before investing in Nucleus. However, this is disputed by Nucleus, which states that Amazon indicated at the time that no competing products were in development. A settlement would eventually have been reached by both parties.

LivingSocial says in conversation with The Wall Street Journal that Amazon requested information after making an investment. The company wanted to receive customer lists and sales data, among other things. LivingSocial says it has refused the request. Amazon is said to have started tempting high-ranking employees to come and work for the company.

Amazon has responded to The Wall Street Journal’s reporting by stating that it does not use information from other companies obtained through the investment arm to create competing products. The company argues that intellectual property disputes have already been fought out in court.

Start-ups’ complaints about Amazon are not isolated. Earlier this year, the US Federal Trade Commission asked for clarification on the policy of making investments to remove competition from the market. The Wall Street Journal has also previously published a story about Amazon using third-party data to make competing products.