Amazon has been using the startup investment process to help it make its own competing products, according to a new report from The Wall Street Journal’s Dana Mattioli and Cara Lombardo.
The Journal spoke with dozens of startup founders, investors, and advisers, who said Amazon met with or invested in their companies, only to later build its own products that directly competed with the smaller company. The Amazon-made products often went on to crush the competition, the Journal found.
The Journal discovered several examples of Amazon’s investments leading to in-house product development. LivingSocial, a deals website, told the Journal that after Amazon took a 30% stake in the company, it began requesting troves of data from the company, hiring away employees, and contacting LivingSocial’s clients to offer better deals.
In another example, investors from the Alexa Fund purchased a stake in the startup Nucleus, which made a video communication device for the home. Eight months later, after gaining access to Nucleus’ plans and financials, Amazon announced the Echo Show, an Alexa-enabled device with a large video screen. Sales of Nucleus’ consumer device quickly declined and the company has since pivoted to selling to the healthcare market, the Journal reports.
Click here to read the rest of the article written by Avery Hartmans over at the Business Insider
