The Wall Street Journal this morning reports about numerous cases in which Amazon or its venture capital arm has met with startups, sometimes made investments, but then launched competing products using at least some of the information that it gleaned from meetings and investments.
"In some cases," the Journal writes, "Amazon’s decision to launch a competing product devastated the business in which it invested. In other cases, it met with startups about potential takeovers, sought to understand how their technology works, then declined to invest and later introduced similar Amazon-branded products, according to some of the entrepreneurs and investors."
The Journal quotes an Amazon spokesperson as saying that "the company doesn’t use confidential information that companies share with it to build competing products." And "former Amazon employees involved in previous deals say the company is so growth-oriented and competitive, and its innovation capabilities so vast, that it frequently can’t resist trying to develop new technologies - even when they compete with startups in which the company has invested."
The story notes that "dealing with Amazon is often a double-edged sword for entrepreneurs. Amazon’s size and presence in many industries, including cloud-computing, electronic devices and logistics, can make it beneficial to work with. But revealing too much information could expose companies to competitive risks."
You can read the story - with all the gory details - here.
- KC's View:
If I were Amazon, this is not the story that I'd want to be coming out at the same time as I'm facing antitrust scrutiny from various arms of the federal government, not to mention testimony by founder-CEO Jeff Bezos before the House of Representatives Judiciary Committee.
For the record, this story does not surprise me - I've had conversations with entrepreneurs over the years in which they've offered anecdotes about meetings with Amazon that went nowhere, but suddenly, months later, competing products or services were announced.
If often has been noted here how Jeff Bezos is a Star Trek aficionado, but behavior like this makes him more like the Borg.