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Amazon accused of investing in startups only to launch competing technology

Amazon met with start-ups regarding investments, only to launch ‘strikingly similar’ products shortly thereafter, a Wall Street Journal report alleges.

The report lists multiple instances of when Amazon’s investment in fledgling companies – which often gave the e-commerce giant access to financial data and internal plans, led to competing products being launched.

In one example cited by the Journal, Amazon’s Alexa Fund invested in a company called Nucleus which was making a video communication device for the home. Eight months later, Amazon debuted the Alexa-powered Echo Show. Amazon ended up settling out of court for $5m, but did not admit to any fault. Nucleus has since shifted to making medical devices.

Related: Best Echo speaker to buy

In another example, when Amazon took a 30% stake in the Groupon-rival LivingSocial, it demanded data, poached employees and began undercutting LivingSocial by offering clients better deals, sources told the WSJ.

Furthermore, Ubi, which made a predecessor to the Amazon Echo speaker with a voice-powered personal assistant, claimed that post-investment, Amazon began to deploy a similar technology.

“They saw all the things we wanted to do with the device [like] music and shopping. It was almost a road map for the product,” Ubi’s Leor Grebler said. “We ended up burning through our cash and ended up having to downsize most of the company.”

He said the company did not have the funds to take Amazon to court after it allegedly terminated a non-disclosure agreement between the pair, prior to launching the Echo speaker in 2015. Amazon told the WSJ it was already working on the Echo before it met with Ubi.

An Amazon spokesperson told the WSJ that “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 record for innovation that rivals Amazon’s. 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.”

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