Amazon Used Privileged Information From Venture Fund Portfolio Companies To Launch Rival Products: WSJ

Amazon.com, Inc. AMZN used privileged information gained during venture fund meetings with startups to launch its own competing products, more than two dozen entrepreneurs, investors, and deal advisors have accused, the Wall Street Journal reported Thursday.

What Happened

Among those making the accusations is artificial intelligence startup DefineCrowd, where the Amazon Alexa Fund had made an investment about four years ago.

DefineCrowd founder and Chief Executive Officer Daniela Braga claimed that A2I, Amazon Web Service’s new offering, competes directly with “one of our bread-and-butter foundational products,” the Journal noted.

Braga has since restricted access of the Alexa fund to the startup’s data, and diluted its stake by 90% by raising additional capital. 

An Amazon spokesperson denied such wrongdoing, stating, the company had a track record of innovation.

“Unfortunately, there will always be self-interested parties who complain rather than build," he said. "Any legitimate disputes about intellectual property ownership are rightly resolved in the courts.”

Jeremy Levine, a partner at Bessemer Venture Partners told the Journal, “It’s like [Amazon] are not in any way, shape or form the proverbial wolf in sheep’s clothing. They are a wolf in wolf’s clothing.”

Why It Matters

In April, a report from the Journal suggested that the ecommerce company’s employees used third-party seller data to determine which company-label products to launch.

Amazon’s lawyers last month said that Bezos was ready to testify in front of the House Judiciary Committee against the company's alleged antitrust practices. 

Bezos was due to appear, along with CEOs of Facebook Inc FB, Alphabet Inc GOOGL GOOG, and Apple Inc AAPL, to testify in front of the Congress and answer questions on antitrust issues on Monday.

The hearing is likely to be postponed due to a conflict with the memorial service for the late Congressman John Lewis (D-Ga), reported CNBC.

Price Action 

Amazon shares closed 3.66% lower at $2,986.55 on Thursday, and added another 0.1% in the after-hours session.