Report: Companies Say Amazon Accessed Proprietary Info To Make Its Own Products

Daniela Braga, founder and CEO of DefinedCrowd Corp., a data platform for artificial intelligence (AI), has a beef with Amazon Inc., The Wall Street Journal (WSJ) reported.

Four years ago, the eCommerce giant’s venture capital fund invested in the Seattle-based company and gained access to the technology startup’s finances and other confidential information.

Earlier this year, Amazon launched A2I, an AI product that Braga told the newspaper mirrors the DefinedCrowd product. She said Amazon Web Services’ offering competes “with one of our bread-and-butter foundational products” that collects and labels data.

After seeing the announcement of A2I’s debut, Braga limited Amazon’s access to her company’s data and diluted its stake by 90 percent by raising more capital, The WSJ reported.

Braga is not the only executive who says Amazon appeared to use the investment in their company to develop competing products.

In 2010, Amazon invested in LivingSocial, the daily deals website, gaining a 30 percent stake, the WSJ reported. Former LivingSocial executives said Amazon began requesting data.

Not long after, LivingSocial executives began hearing from clients that Amazon was offering them better terms.

“They are using market forces in a really Machiavellian way,” Jeremy Levine, a partner at San Francisco-based venture-capital firm Bessemer Venture Partners, told the newspaper. “It’s like they are not in any way, shape or form the proverbial wolf in sheep’s clothing. They are a wolf in wolf’s clothing.”

Amazon denied it uses confidential information companies share to construct competing products.

“Unfortunately, there will always be self-interested parties who complain rather than build,” Drew Herdener, an Amazon spokesman, told the WSJ. “Any legitimate disputes about intellectual property ownership are rightly resolved in the courts.”

In April, PYMNTS reported former Amazon employees said the company violated its own policies when workers took data from its independent sellers to launch competing products.

While Amazon has said it places restrictions on staff from accessing the data of its millions of sellers, more than 20 former employees said they accessed sellers’ information to determine which products they should make under its private labels.

Last year, the Federal Trade Commission (FTC) commenced an investigation into Amazon, Apple, Facebook, Alphabet’s Google and Microsoft over antitrust implications, and in February asked the companies to produce information regarding takeovers of smaller companies between the years of 2010 and 2019.