[Slashdot] - Amazon Met With Startups About Investing, Then Launched Competing Products

Some companies regret sharing information with tech giant and its Alexa Fund. From a report: When Amazon.com's venture-capital fund invested in DefinedCrowd, it gained access to the technology startup's finances and other confidential information. Nearly four years later, in April, Amazon's cloud-computing unit launched an artificial-intelligence product that does almost exactly what DefinedCrowd does, said DefinedCrowd founder and Chief Executive Daniela Braga. The new offering from Amazon Web Services, called A2I, competes directly "with one of our bread-and-butter foundational products" that collects and labels data, said Ms. Braga. After seeing the A2I announcement, Ms. Braga limited the Amazon fundâ(TM)s access to her company's data and diluted its stake by 90% by raising more capital. Ms. Braga is one of more than two dozen entrepreneurs, investors and deal advisers interviewed by The Wall Street Journal who said Amazon appeared to use the investment and deal-making process to help develop competing products. In some cases, 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. An Amazon spokesman said the company doesn't use confidential information that companies share with it to build competing products. 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.

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