Startups Accuse Amazon of Stealing Technology to Create Competing Products
Amazon is coming under fire once again after allegedly collecting confidential information from startups to produce and launch competing products.
In a recent article published by The Wall Street Journal, DefinedCrowd Corp., a technology startup, accused the multinational technology company of investing in their startup to gain access to confidential information.
According to DefinedCrowd founder and Chief Executive Daniela Braga, Amazon's venture-capital fund invested in their company. The funding earned the e-commerce giant access to the technology startup's finances and other information. Four years later, Amazon launched a cloud-computing unit that resembled what DefinedCrowd has.
Amazon Web Services' artificial intelligence product, called A21, competes with the startup business' foundational product. The new offering collects and labels data, which was almost exactly what DefinedCrowd's product did.
After seeing the announcement, Braga decided to limit Amazon's access to their company's data. She also diluted their stake by over 90 percent.
Several entrepreneurs and investors accused Amazon of meeting with startups about a potential investment. They said the technology giant asked details about their products, then Amazon would suddenly decline to invest. Instead, they would introduce similar products under the Amazon brand.
Leo Grebler launched a Kickstarter campaign in 2012, where he successfully raised $36,000 for a voice-activated device called Ubi. He began meeting with Amazon in late 2012 to discuss how his technology work.
According to a report by the Business Insider, Grebler was under the impression that Amazon would try to acquire Ubi or license the technology. He conducted a demo of his device with a group of Amazon executives in 2013.
Amazon suddenly cut off any contact with Grebler after the meeting. Nearly a year later, the multinational technology company announced its Echo device. In June 2015, the controversial product hit the market.
In October 2015, Amazon's cloud computing arm announced it was copying and releasing a copy of Elastic's software tool, as reported by The New York Times. The Amsterdam-based startup had been selling its product, Elasticsearch, on Amazon, and was used to search and analyze data. However, Amazon announced that it would sell the product as a paid service.
Within a year, Amazon was earning more than Elastic. The startup added premium features, but Amazon only duplicated most and provided them for free.
Elastic sued Amazon in federal court. It claimed that the tech giant violated its trademark by selling its product by the same name. Amazon vehemently denied it had done the company wrong.
In February, the U.S. Federal Trade Commission (FTC) ordered Amazon and four other large technology companies to provide details on investments and acquisitions between 2010 and 2019. The data would be used to determine whether the companies had conducted anti-competitive deals.
Congress and the Justice Department are also scrutinizing the company over whether it unfairly uses its platform against competitors or sellers using its services. Jeff Bezos, along with the other technology CEOs, is set to testify before Congress on Monday.
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