Investor Strategy

A startup told Congress that Amazon’s multibillion-dollar cloud business lured it with free services and then copied its product (AMZN)

Andy Jassy

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An unnamed startup told Congress that Amazon’s multibillion-dollar cloud division lured it with incentives such as rate cuts and free services, and then copied the startup’s product, according to a 449-page report released Tuesday by the House antitrust subcommittee.

A representative from the unnamed startup, referred to only as “Source 126” in the report, said the startup talked about partnerships with Amazon and participated in AWS Activate, a program through which Amazon Web Services gives startups free credits for cloud services, technical support, and training.

During the partnership conversations, the person said the startup shared information with AWS about how its product was built. Amazon introduced a “replica” product within a few years, according to the startup. The report does not provide details on the nature of the startup or its product.

AWS, the person said, “had so many incentives. Rate cuts, and free services. Not having a lot of resources, it’s hard to turn that down. But fast forward, we basically helped them build their offering that they copied from us,” per the report.

Amazon has been accused of copying a startup’s product before. The Wall Street Journal recently published a report based on interviews with dozens of startup founders, investors, and advisers who said Amazon met with or invested in their companies and later built competing products.

AWS has yet to respond to a request for comment. However, the report shows that AWS was asked by the subcommittee “whether it uses or has ever used AWS usage patterns or data to inform its investment decisions.”

“AWS uses data on individual customers’ use of AWS to provide or improve the AWS services and grow the business relationship with that customer,” the company responded, according to the report. “This data may inform AWS’s decisions about how AWS invests in infrastructure, such as data centers, edge networks, hardware, and related software solutions in order improve the customer experience.”

“Amazon’s response leaves unclear whether it would view it appropriate to use a firm’s AWS data to develop products competing with that firm, so long as Amazon could identify some benefit to the broader ‘customer experience,'” the report stated.

Got a tip? Contact reporter Ashley Stewart via encrypted messaging app Signal (+1-425-344-8242) or email (astewart@businessinsider.com).

SEE ALSO: Leaked documents show how Microsoft is making changes to its elite organization of ‘trusted advisers’ to incentivize them to help grow the Azure cloud business

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