14 DAY TRIAL // Amazon has reportedly used its startup investment program to actually obtain information about products developed by smaller companies only to then use it for launching its own rival devices.
In other words, the company actually got in touch with a series of startups, met with their officials, in some cases even purchased a small stake, all in an attempt to get access to data that then allowed it to launch products similar to the ones developed by these startups.
A report from the Wall Street Journal points to multiple examples, including of a company called LivingSocial, whose representatives met with Amazon to discuss a potential investment.
Amazon ended up purchasing 30 percent of LivingSocial, but according to the report, the company then requested access to proprietary data and reached out to its clients offering better deals for similar products.
Antitrust hearing on Monday
Officials working for the company that built Ubi, a smart speaker that was launched before Amazon’s Echo, say they also met with Amazon executives to discuss a collaboration. Amazon eventually launched products that were based on the same ideas as theirs, as it’s the case of the Echo speaker.
Some startup founders claim that after Amazon launched rival products their businesses collapsed, being forced to downsize their companies.
On the other hand, Amazon refused to comment on the story, explaining that the meetings with companies that it wants to invest in are confidential. It did add that no information obtained from such meetings is used for building 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 was quoted as saying by 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."
Amazon is one of the companies that are facing claims of anticompetitive behavior in the United States, with an official hearing scheduled for Monday when CEO Jeff Bezos will testify in front of the House Judiciary Committee.