Venture: To Trust Or Not To Trust Big Tech

Over the past couple of years, Amazon has been luring entrepreneurs into their hands and then backhanding them. When people see that Amazon is willing to look at their company most people will jump out of their chairs but unfortunately it was not what it was all made out to be. Amazon has been looking at these new business ideas and either making a competitive product or using the exact same design or idea to run that product out of the market.

Amazon cloud-computing unit has launched its artificial intelligence product that does exactly what a company known as DefinedCrowd does. Amazon was able to do this by being an investor in the company and gained access to the startup’s insider information. The new Amazon Web Services is called “A2I” which competes directly with the Definedcrowd products.

Daniela Braga is the Founder and Chief Executive of Definedcrowd. Ms. Braga knew that Amazon would be a tricky investor because of how they have acted in the past. Knowing this Ms. Braga limited Amazon funds access to her company’s data and diluted its stake by 90% by raising more capital.

Many former employees of Amazon that have been involved in previous deals stated that the company is growth-oriented and competitive. The main takeaway is how vast Amazon’s innovation capabilities are, being able to have such a large and powerful workforce behind their project. Bezos workforce has reached a point where they need to be constantly working on new products and developing new technologies even if that means competing with their own startup that they invested in.

Jeremy Levine who is a partner at a venture-capital firm known as Bessemer Venture Partners stated that “ They are using market forces in a really Machiavellian way, 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.”

Many large firms are now realizing how big of a threat that Amazon is becoming and the risk that is taken when doing business with them. This is been happening with many new entrepreneurs who have conducted business with Amazon. Stating that Amazon uses the investment and deal-making process to develop competing products.

By doing this Amazon will develop a worse product for what company they have invested in so that the company will tank, and Amazon will run that market. On another hand, with entrepreneurs who declined Amazo’s investment, it comes around to hurt them because Amazon will develop a product and label it as theirs.

If a consumer goes on to Amazon now there is a whole section of “Amazon Essential” where they sell everyday products under the Amazon brand. These products are typically a little bit cheaper than the brand name but overall serve the same purpose. From kitchen appliances to running shorts Amazon will soon be selling everything that you need under their own brand name.

Amazon has been under fire many times for this action and has even testified before Congress. In this act, they were accused of taking user data from its own sellers to develop competing products. By doing so, Amazon is showing its security features are strong and valiant when dealing with competitors.

This past February, the big five tech companies were brought upon the Federal Trade Commission to provide details on acquisitions and investments from 2010 to 2019 to analyze and assess if any of the deals were anticompetitive. The top five tech companies being Amazon.com Inc. Apple Inc., Facebook Inc., Microsoft Corp, and Google owner Alphabet Inc. There were a combined 400 or more acquisitions over the last decade.

It is difficult for the FTC to determine whether or not these companies are breaking antitrust laws because certain deals that are made typically meet the value threshold and allow them to escape any review that is needed to be made by the FTC.

Competitors are getting concerned over this because they do not know if their will ever be an end to this growth and there may be a need for government intervention. Just recently the big tech companies were under fire for breaking antitrust laws. Most of the questions were directed at Amazon CEO Jeff Bezos asking specific questions on third party products and selling user information.

The Amazon marketplace users have become more skeptical of what they see on Amazon and are beginning to do more research before buying products through the easy to use the website. “The retail market we participate in is extraordinarily large and competitive. There is room in the retail for multiple winners”, Bezos addressing the concerns over the power that Amazon has wielded.

With his lasting remarks being, “I can’t guarantee you that this policy has never been violated”. Claiming that he wants Amazon third-party sellers to succeed and benefits when consumers have more options.

Now that Amazon has become such a large company and has major effects on the world’s economy there is going to be more and more government intervention and what their effect will be primarily in America. “It seems to call into question your commitment to our country and our values,” said Rep. Matt Gaetz.

Since the beginning of big tech, they have been under heavy scrutiny for becoming these major players in the market but are they really the ones to blame. People will continue to use their products and as they continue to grow and improve consumers will keep coming back.

The founders of these companies should be applauded for the hard work that they put into the companies since they have grown so much. It may seem a tall glass to drink when going up against one of these companies but at one point they too started out as a startup.