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Amazon.com Inc Antitrust Laws and Competition Issues Computers and the Internet e-commerce Google Inc Inventions and Patents Regulation and Deregulation of Industry Sonos Inc Speakers (Audio) Suits and Litigation (Civil) Uncategorized

Sonos, Squeezed by the Tech Giants, Sues Google

SANTA BARBARA, Calif. — In 2013, Sonos scored a coup when Google agreed to design its music service to work easily with Sonos’s home speakers. For the project, Sonos handed over the effective blueprints to its speakers.

It felt like a harmless move, Sonos executives said. Google was an internet company and didn’t make speakers.

The executives now say they were naïve.

On Tuesday, Sonos sued Google in two federal court systems, seeking financial damages and a ban on the sale of Google’s speakers, smartphones and laptops in the United States. Sonos accused Google of infringing on five of its patents, including technology that lets wireless speakers connect and synchronize with one another.

Sonos’s complaints go beyond patents and Google. Its legal action is the culmination of years of growing dependence on both Google and Amazon, which then used their leverage to squeeze the smaller company, Sonos executives said.

Sonos advertises its speakers on Google and sells them on Amazon. It built their music services and talking virtual assistants directly into its products. Sonos workers correspond via Gmail, and run the business off Amazon’s cloud-computing service.

Then Google and Amazon came out with their own speakers, undercutting Sonos’s prices and, according to Sonos executives, stealing its technology. Google and Amazon each now sell as many speakers in a few months as Sonos sells in one year.

Like many companies under the thumb of Big Tech, Sonos groused privately for years. But over the past several months, Patrick Spence, Sonos’s chief executive, decided he couldn’t take it anymore.

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Credit…Adam Amengual for The New York Times

“Google has been blatantly and knowingly copying our patented technology,” Mr. Spence said in a statement. “Despite our repeated and extensive efforts over the last few years, Google has not shown any willingness to work with us on a mutually beneficial solution. We’re left with no choice but to litigate.”

Sonos executives said they had decided to sue only Google because they couldn’t risk battling two tech giants in court at once. Yet Mr. Spence and congressional staff members have discussed his testifying to the House antitrust subcommittee soon about his company’s issues with them.

Jose Castaneda, a Google spokesman, said Google and Sonos had discussed both companies’ intellectual property for years, “and we are disappointed that Sonos brought these lawsuits instead of continuing negotiations in good faith.”

“We dispute these claims and will defend them vigorously,” he added.

A spokeswoman for Amazon, Natalie Hereth, said the company did not infringe on Sonos’s technology. “The Echo family of devices and our multiroom music technology were developed independently by Amazon,” she said.

Sonos sued Google in Federal District Court in Los Angeles and in front of the United States International Trade Commission, a quasi-judicial body that decides trade cases and can block the import of goods that violate patents. Sonos sued Google over only five patents, but said it believed Google and Amazon had each violated roughly 100. Sonos did not say how much it sought in damages.

The evolving relationship between Sonos and the tech giants reflects an increasingly common complaint in the corporate world: As the biggest tech companies have become essential to reach customers and build businesses, they have exploited that leverage over smaller companies to steal their ideas and their customers.

After mostly keeping those grievances private for years because they feared retaliation, many smaller companies are now speaking out, emboldened in an age of growing scrutiny of America’s largest tech firms.

Credit…Adam Amengual for The New York Times
Credit…Adam Amengual for The New York Times

Mr. Spence and other Sonos executives said they had agonized over the decision to sue Google, largely because Google still underpins their business. Sonos executives suspect that their pressure on the patent issue has complicated other areas of the relationship, though they can’t say for sure.

After Sonos intensified its demands that Google license its technology, Google pushed Sonos to comply with stricter rules for using Google’s virtual assistant. Those proposed rules included a mandate to turn over the planned name, design and targeted start date of its future products — which Google would compete directly against — six months in advance, up from 45 days in the current deal, Sonos executives said.

“The fear of retaliation is a real fear. Any of these companies could bury them tomorrow. Google could bury them in their search results. Amazon can bury them in their search results,” said Sally Hubbard, a former assistant attorney general in New York’s antitrust bureau who now works at Open Markets Institute, a think tank. “It’s really hard to find any industry where corporations are not dependent on one of the big tech giants.”

Fifteen years ago, home sound systems typically meant a tangled network of wires and speakers and complicated instructions on how to make it all work. Then Sonos came along in 2005, promising wireless sound throughout a house, seamlessly controlled from a hand-held device. Its early ads boasted: “Any song. Any room.

Sonos quickly began patenting its innovations, a stockpile of intellectual property it now proudly displays on its website.

Its devices made life a bit more comfortable for consumers who could afford them, and they made for a nice little business for Sonos, which is based a few miles from the Southern California coast in Santa Barbara. Sales of its devices took off after the advent of the smartphone and music streaming. Sonos now employs about 1,500 people and sells more than $1 billion in speakers a year.

When Sonos teamed up with Google in 2013, it gave Google engineers detailed diagrams on how its speakers interacted wirelessly with one another. At the time, Google was not a competitor.

Two years later, Google released a small device that could turn an old speaker into a wireless one, much like Sonos’s original product. A year after that, Google released its own wireless speaker, the Google Home. The device, marketed around Google’s talking virtual assistant, quickly began outselling Sonos’s offerings.

Sonos bought the Google devices and used a technique called packet sniffing that monitored how the speakers were communicating. They discovered that Google’s devices used Sonos’s approach for solving a variety of technological challenges. Sonos executives said they had found that Amazon’s Echo speakers also copied Sonos technology.

In August 2016, Sonos told Google that it was infringing. Google had little response. As Google released more products, it violated more patents, Sonos executives said. Over the next three years, Sonos told Google four more times, eventually handing over a list of 100 patents it believed Google had violated. Google responded that Sonos was also infringing on its patents, Sonos executives said, though it never provided much detail.

When Sonos delivered a proposed model for Google to pay licensing fees, Google returned its own model that resulted in its paying almost nothing, Sonos executives said.

Sonos executives said their complaints were hardly just about patents, however. They are concerned that Google and Amazon are flooding the market with cheap speakers that they subsidize because they are not merely conduits for music, like Sonos’s devices, but rather another way to sell goods, show ads and collect data.

Sonos’s entry-level speaker is about $200. Amazon and Google’s cheapest speakers are $50, and they often offer them at much steeper discounts.

In the third quarter of 2019, Amazon shipped 10.5 million speakers and Google six million, according to Strategy Analytics. For the 12 months ending in September, Sonos said it had sold 6.1 million speakers.

“Amazon and Google are making it a mass-market product at a price point that Sonos can’t match,” said Jack Narcotta, a Strategy Analytics analyst.

Amazon said that it was focused on creating the best experience for customers and that its virtual assistant had generated “billions of dollars” for developers and device makers.

To compete, Sonos has had to yield even more power to the companies. When consumers became hooked on Google’s and Amazon’s virtual assistants, Sonos also built them into its speakers.

But Sonos had a strategy to still stand out on store shelves. Instead of being locked into using just one of the assistants, Sonos customers could use both simultaneously. Sonos engineers patented the technology to enable the assistants to work side by side, and executives lobbied Amazon and Google to let it happen.

At first, the companies hated the idea. Hours before a New York news conference in October 2017, Sonos was preparing to unveil its first speaker with virtual assistants when the Amazon product chief Dave Limp called Mr. Spence. Mr. Limp had just found out that Google would also be onstage, and he said Amazon was now pulling out of the event as a result, according to two people familiar with the conversation. After negotiations, Amazon relented.

Sonos executives said Google and Amazon had ultimately forced them to make users select one assistant when setting up their speaker. Amazon said it had never asked Sonos to force users to choose its assistant or Google’s version.

Amazon later changed its position and joined an alliance with Sonos and other companies to make virtual assistants like Alexa function together. Google, along with Apple and Samsung, did not join the alliance.

Google has maintained, Sonos executives said, that it will pull its assistant from Sonos’s speakers if it works alongside any assistant from Amazon, Apple, Microsoft or Baidu, the Chinese internet company. Sonos has followed Google’s orders.

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Airlines and Airplanes Drones (Pilotless Planes) Federal Aviation Administration Regulation and Deregulation of Industry Transportation Transportation Department (US) Uncategorized

The F.A.A. Wants to Start Tracking Drones’ Locations

The Federal Aviation Administration proposed wide-sweeping regulations on Thursday that would require that all but the tiniest drones incorporate technology that would enable them to be tracked at all times while flying in United States airspace.

“Remote ID technologies will enhance safety and security by allowing the F.A.A., law enforcement and federal security agencies to identify drones flying in their jurisdiction,” the federal transportation secretary, Elaine L. Chao, said in a statement.

As drone operators, manufacturers and others involved in the rapidly expanding drone industry began sifting through the 319-page proposal on Thursday afternoon, responses varied wildly. While some applauded the F.A.A. for finally creating a system to rapidly identify owners of rogue — potentially deadly — drones, others declared that this was going to drastically hinder drone efficiency and cost effectiveness.

Since 2015, operators of all drones that weigh more than half a pound have been required to register their devices, by submitting their names along with their email and home addresses to the F.A.A. Some federal facilities — prisons, for example — are authorized to use systems to detect the presence of drones, said Reggie Govan, a former chief counsel to the F.A.A. who now teaches at the University of Pennsylvania Law School.

But at the moment, officials do not have a quick way to identify the owner of a given drone or to track the location of drones that have been registered by a particular person. Even airports and power plants currently lack the legal authority to track drones, Mr. Govan said.

At the simplest level the proposed regulation requires all drones over 0.55 pound to emit a very particular kind of signal. “Once you have drones that are emitting an identifier then you can have a system that can track all drones,” Mr. Govan said, adding that he applauded the regulations.

Brendan Schulman, vice president for policy and legal affairs at DJI, a Chinese company that is one of the leading manufacturers of small consumer drones, said that for the past several years, industry leaders and government stakeholders had been trying to figure out how to create a sort of drone “license plate system.” He said that the proposed system could make sense. His primary concern is that the cost and burden to drone pilots and operators remain low — something he is still evaluating. (DJI was embroiled in another government drone matter, with mounting security concerns that the cameras and other technology on its drones could send surveillance data back to China.)

But for Paul Aitken, a founder of DroneU, a drone pilot training company in New Mexico, the costs immediately struck him as excessive. The new regulations require all registered drones within 36 months to begin carrying a specific type of remote identification system that broadcasts over the internet.

Often finding an internet connection is not feasible in the locations where drone operators fly, Mr. Aitken said. According to his reading of the rules, if you don’t have cellular service or another way to connect to the internet, operators will have to limit flights to 400 feet laterally, which is roughly to the end of a block — and back.

Search and rescue missions often require going at least four times that distance, he said. “People will literally die from these rules,” he said, adding that other “industries that are thriving with drones like utility inspection, precision agriculture, land surveying, ranch management and even some construction management would suffer greatly” given that the rules undermine efficiency, which for many is part of the appeal of drones.

He is also concerned that drone pilots will have to publicly disclose their locations. “Pilots need privacy to protect them from fear-based citizens who think that drones are spying on them,” he said.

A New York City councilman, Justin Brannan, said he thought this was a step in the right direction, however. It is currently illegal to fly a drone in most of New York City. “We need to create a framework for drones to legally and safely operate here in New York City because I do believe the benefits will outweigh the risks,” he said.

The so-called Notice of Proposed Rulemaking will be open to public comment for 60 days. After reviewing comments, the F.A.A. will finalize the rule, it said.

Jonathan Rupprecht, a Florida-based lawyer who specializes in drones, was left with many questions as to how this would be enforced. He pointed out that the F.A.A. had rarely prosecuted violations of drone regulations — such as flying in a careless manner or flying an unregistered aircraft — over the last decade. “They should refrain from biting off more than they can chew,” he said. Mr. Rupprecht said that focusing on locations that need protecting, instead of creating an unwieldy tracking system for the entire United States, would be more realistic.

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5G (Wireless Communications) Antitrust Laws and Competition Issues Delrahim, Makan Justice Department Mergers, Acquisitions and Divestitures Regulation and Deregulation of Industry Sprint Nextel Corporation T-Mobile US Inc Uncategorized Wireless Communications

How a Top Antitrust Official Helped T-Mobile and Sprint Merge

WASHINGTON — As the $26 billion blockbuster merger between T-Mobile and Sprint teetered this summer, Makan Delrahim, the head of the Justice Department’s antitrust division, labored to rescue it behind the scenes, according to text messages revealed this week in a lawsuit to block the deal.

Mr. Delrahim connected company executives with the F.C.C. and members of Congress. And he gave executives insight into the thinking of Ajit Pai, the chairman of the F.C.C. who would also have to approve the merger.

He is “open and willing” to discussions about the deal, Mr. Delrahim said in one text message in June, a month before regulators blessed the transaction.

The messages between Mr. Delrahim and the executives involved in structuring one of the telecom industry’s most significant mergers in generations provide a rare inside look at the hands-on work the Justice Department’s top antitrust official undertook to shape the deal.

While it is not unusual for a law enforcement official to work behind the scenes to help companies overcome antitrust concerns, efforts like the one undertaken by Mr. Delrahim are almost always hidden from view.

The text messages show that he played a crucial role in bringing together top executives of T-Mobile, Sprint and another company, Dish, for negotiations. The Justice Department has said it would not have approved the merger without the emergence of another competitor like Dish.

The Obama administration rejected an earlier proposed merger between the companies, and it remains deeply unpopular with some consumer groups who fear it will increase prices for Americans, especially in rural areas.

Mr. Delrahim oversaw the often hostile talks between the companies, while pulling strings to get lawmakers and other regulators on board.

“Had a generally good chat with the chairman,” Mr. Delrahim wrote to Charles Ergen, the chief executive of Dish, the company that would prove crucial to the deal’s passage. The following day he encouraged Mr. Ergen to lobby lawmakers to urge Mr. Pai to approve new deal terms that would give Mr. Ergen more time to build out a competitive telecom business.

Mr. Ergen did so. He told Mr. Delrahim that he had “very good” meetings in Washington and that he talked to Mitch McConnell, the Senate majority leader, about the deal, according to the text messages.

When asked about the text messages, a Justice Department spokesman said that “the Antitrust Division is proud of its work in reviewing this important merger on behalf of the American consumer,” but declined to comment further.

T-Mobile and Dish declined to comment on the messages, which were submitted as evidence in a legal challenge to the merger led by the New York and California state attorneys general. Sprint didn’t immediately respond to requests for comment.

The messages also show that SoftBank, the Japanese conglomerate that owns the majority of Sprint, discussed lending Dish money to buy the assets it needed to become a telecom company.

In such an arrangement, SoftBank would essentially be financing a competitor to its own company, Sprint. But SoftBank also stood to lose financially if a Sprint-T-Mobile merger did not happen.

SoftBank declined to comment on Thursday.

In one strained exchange, Mr. Ergen told John Legere, the chief executive of T-Mobile, that he was still working to get terms of a deal done, pending board approval and “any other issues from our/your team.”

“And waiting on Softbank to finance the deal?” Mr. Legere wrote.

Mr. Ergen said publicly this week that several potential lenders had emerged to help his company buy assets, including JPMorgan Chase and SoftBank.

Sprint and T-Mobile, the third- and fourth-largest wireless companies, announced their latest merger plans in April 2018. The carriers promised their union would allow them to combine resources and bring the next generation of wireless broadband, known as 5G, for fifth generation, to rural America. They would have a combined 80 million United States subscribers.

The Justice Department announced its approval of the deal in July, citing the creation of a fourth and new competitor in Dish, which would buy assets from Sprint and T-Mobile to become a telecom company. In a parallel review, the chairman of the Federal Communications Commission announced it planned to approve the deal weeks later.

The merger is being challenged in court by several states and cannot close until that lawsuit is resolved. State attorneys general in New York and California are unconvinced that Dish will provide true market competition.

“Dish is a struggling satellite TV firm with no experience running a mobile wireless business — and no current mobile wireless business,” Paula Blizzard, California’s deputy attorney general, said on a call with journalists this month. “We cannot count on Dish one day in the future somehow growing into a viable wireless company equal to Sprint’s reach today.”

Mr. Delrahim was pressured to block the merger throughout the department’s review. Several Democratic lawmakers, consumer groups and state attorneys general said the deal would harm consumers by reducing the number of national wireless carriers to three from four. The reduction in competition would most likely lead to higher consumer wireless bills, the critics warned.

To salvage the deal, the companies came up with a solution: bring in Dish Network to buy some of their wireless assets to form another competitor and maintain four national mobile carriers.

Mr. Delrahim told reporters at a press event in July that the deal would not have passed muster without Dish, which had agreed to buy Sprint’s prepaid wireless service, Boost, for $5 billion, as well as other assets from T-Mobile.

“We were prepared to sue to block the deal,” Mr. Delrahim said in July, when he announced his approval.

In texts sent this May and June, Mr. Delrahim helped coordinate meetings between Mr. Ergen, Mr. Legere and Marcelo Claure, the chief operating officer of SoftBank and the chairman of the Sprint board, as they negotiated asset sales to Dish.

“I anticipate being part of the meeting and then leaving it to you guys to hash out details as needed,” Mr. Delrahim wrote in one text to Mr. Ergen about a meeting with Mr. Legere.

The telecom executives gave Mr. Delrahim regular updates on their often difficult negotiations. Both T-Mobile and Sprint executives were frustrated at times with Mr. Ergen, who told them he needed time to get his board to approve aspects of the deal.

“Why do you always play games. You got a deal of a lifetime and don’t blow it,” Mr. Claure told Mr. Ergen. “And you control your board.”

Mr. Legere and Mr. Ergen were sometimes hard to wrangle. At one point, when Dish sought funding from SoftBank, Mr. Legere was indignant.

“You’ve crossed the line,” he wrote. “For full disclosure (which may be a new term to you) I have told Makan I don’t believe you are serious about doing a deal.”

Mr. Delrahim seemed aware of the friction. In one set of messages, he invited Mr. Ergen to a meeting the next day with Mr. Legere and Mike Sievert, the president of T-Mobile, in his conference room at the Justice Department. “2pm confirmed,” Mr. Delrahim wrote. “I have not told John and Mike the meeting is w you yet, I will tell them in the AM.”

But the day the meeting was scheduled, Mr. Delrahim gave Mr. Ergen an update about a long talk he had held with Mr. Legere, Mr. Sievert and Mr. Claure.

“John is going to reach out to you,” Mr. Delrahim wrote. “May make good sense for you all to meet alone at 2, and then we all meet later today? I will make myself available.”

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Backpage.com Child Abuse and Neglect Human Trafficking Law and Legislation Online Advertising Prostitution Regulation and Deregulation of Industry Sex Crimes Uncategorized

Stamping Out Online Sex Trafficking May Have Pushed it Underground

WASHINGTON — To combat the ills of the internet, federal lawmakers have increasingly focused on a decades-old law that shields tech companies like Facebook and YouTube from liability for content posted by their users.

Last year, lawmakers approved chipping away at the law, voting overwhelmingly to hold tech platforms accountable when people use their sites for sex-trafficking schemes. They have since floated other changes as well, like making Facebook or other platforms liable when opioids are sold on their sites.

But now, as the real-world effects of the sex-trafficking change take hold, some experts and politicians say the results are not all positive. And even some lawmakers who have championed a crackdown on Big Tech are now calling to revisit the change. On Tuesday, Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts, two of the tech industry’s loudest critics, joined 11 other lawmakers in backing a federal study of its effects.

Law enforcement officials say that it is sometimes more difficult to track traffickers, because the law pushed them further underground. Advocates say that sex workers now face higher safety risks. The removal of sites advertising sex hinders their ability to vet their clients, the advocates say, and is pushing more of them onto the streets.

The renewed focus on the 2018 measure illustrates the difficulty of regulating the internet, including changes to Section 230 of the Communications Decency Act, the 1996 law that enshrined platforms’ widespread immunity for what their users post. Even when lawmakers reach a consensus that a change is necessary — as was the case with sex trafficking — the ramifications can be wider than many expect.

“It’s really a good test case as we’re looking at other types of carve-outs to Section 230,” said Jeff Kosseff, an expert on the Section 230 protections. Lawyers across the country have also fought to limit the protections, arguing they don’t apply in cases where a digital product is defective. A set of anti-trafficking lawsuits in Texas threatens to chip away at the protections as well.

When lawmakers approved the Fight Online Sex Trafficking Act last year, it was hailed as a way to catch up to the reality that the bartering of children and adults had moved from the streets to the web. It came after alarming allegations emerged about how Backpage, a classifieds site, may have been playing a role in trafficking.

Advocates for sex workers warned ahead of the vote in Washington about some of the potential downsides of the law. But they struggled to break through to lawmakers, who were hearing testimony from groups representing trafficking survivors.

“It misunderstands the way that trafficking works, if you think that making it less visible reduces the occurrence,” said Kate D’Adamo, an advocate for sex workers’ rights.

Their concerns have found a broader audience in recent months, even bubbling up on the presidential campaign trail. During a CNN town hall with the Democratic candidates this fall, for example, a questioner asked Senator Amy Klobuchar of Minnesota, who had voted for the bill, what she would do to “counteract the negative impact this law has had.”

Representative Ro Khanna, a Democrat of California who was one of the few votes against the bill last year, said he believed Congress should have heard more about those concerns. He helped write the new legislation to study the law after hearing more from sex worker advocates.

“They didn’t hear the perspective of the impact it’s having on sex workers,” he said of his colleagues. “This is a cautionary tale that we have to be very deliberate, thoughtful, inclusive in how we regulate the internet.”

Mr. Khanna said that if a study of the law showed harm to sex workers, he hoped it would bolster the case for a repeal of the 2018 law.

Many supporters of the 2018 law say it has had a positive effect on the internet, and has helped curb sex trafficking. They note that no site has cropped up to replace Backpage, which was taken down as part of a federal criminal case before the law passed.

Senator Richard Blumenthal, a Democrat from Connecticut who sponsored the 2018 law, said in a statement that the sex trafficking carve-out was written to “change tech industry practices,” and that it had succeeded.

Any website that closed down because of the law, he said, “did so because it was knowingly facilitating sex trafficking or it was misled by critics of the law.”

But sex worker advocates point to changes on Craigslist, the classified site, and Reddit, the discussion board. Both sites removed swaths of content that referred to sex because the companies found it too difficult to tell whether people featured in the posts were being trafficked. Craigslist shuttered its personals section, for example, and Reddit closed forums called “Escorts” and “SugarDaddy.”

“Any tool or service can be misused,” Craigslist said in a statement at the time, explaining its decision to remove some ads in response to the law. “We can’t take such risk without jeopardizing all our other services.”

The company did not respond to recent requests for comment.

Mr. Kosseff said the moves by Craigslist and other sites demonstrated that even minor changes to Section 230 could alter the venues for speech online.

“Now, whether that’s good or bad, that really depends on what your goals are,” he said.

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Amazon.com Inc Antitrust Laws and Competition Issues Cloud Computing Computers and the Internet Elastic NV Innovation Open-Source Software Regulation and Deregulation of Industry Start-ups Suits and Litigation (Civil) Uncategorized

Prime Leverage: How Amazon Wields Power in the Technology World

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Credit…Nolan Pelletier

Software start-ups have a phrase for what Amazon is doing to them: ‘strip-mining’ them of their innovations.


SEATTLE — Elastic, a software start-up in Amsterdam, was rapidly building its business and had grown to 100 employees. Then Amazon came along.

In October 2015, Amazon’s cloud computing arm announced it was copying Elastic’s free software tool, which people use to search and analyze data, and would sell it as a paid service. Amazon went ahead even though Elastic’s product, called Elasticsearch, was already available on Amazon.

Within a year, Amazon was generating more money from what Elastic had built than the start-up, by making it easy for people to use the tool with its other offerings. So Elastic added premium features last year and limited what companies like Amazon could do with them. Amazon duplicated many of those features anyway and provided them free.

In September, Elastic fired back. It sued Amazon in federal court in California for violating its trademark because Amazon had called its product by the exact same name: Elasticsearch. Amazon “misleads consumers,” the start-up said in its complaint. Amazon denied it had done anything wrong. The case is pending.

Not since the mid-1990s, when Microsoft dominated the personal computer industry with Windows, has a technology platform instilled such fear in competitors as Amazon is now doing with its cloud computing arm. Its feud with Elastic illustrates how it brandishes power in that technical world.

While cloud computing may appear obscure and geeky, it underlies much of the internet. It has grown into one of the technology industry’s largest and most lucrative businesses, offering computing power and software to companies. And Amazon is its single-biggest provider.

Amazon has used its cloud computing arm — called Amazon Web Services, or A.W.S. for short — to copy and integrate software that other tech companies pioneered. It has given an edge to its own services by making them more convenient to use, burying rival offerings and bundling discounts to make its products less expensive. The moves drive customers toward Amazon while those responsible for the software may not see a cent.

Even so, smaller rivals say they have little choice but to work with Amazon. Given the company’s broad reach with customers, start-ups often agree to its restrictions on promoting their own products and voluntarily share client and product information with it. For the privilege of selling through A.W.S., the start-ups pay a cut of their sales back to Amazon.

Some of the companies have a phrase for what Amazon is doing: strip-mining software. By lifting other people’s innovations, trying to poach their engineers and profiting off what they made, Amazon is choking off the growth of would-be competitors and forcing them to reorient how they do business, the companies said.

All of this has fueled scrutiny of Amazon and whether it is abusing its market dominance and engaging in anticompetitive behavior. The company’s tactics have led several rivals to discuss bringing antitrust complaints against it. And regulators and lawmakers are examining its clout in the industry.

“People are afraid that Amazon’s ambitions are endless,” said Matthew Prince, chief executive of Cloudflare, an A.W.S. competitor that protects websites from attacks.

A.W.S. is just one prong of Amazon’s push to dominate large swaths of American industry. The company has transformed retailing, logistics, book publishing and Hollywood. It is rethinking how people buy prescription drugs, purchase real estate and build surveillance for their homes and cities.

But what Amazon is doing through A.W.S. is arguably more consequential. The company is the unquestioned market leader — triple the size of its nearest competitor, Microsoft — in the seismic shift to cloud computing. Millions of people unknowingly interact with A.W.S. every day when they stream movies on Netflix or store photos on Apple’s iCloud, services that run off Amazon’s machines.

Jeff Bezos, Amazon’s chief executive, once called A.W.S. an idea “no one asked for.” The service began in the early 2000s when the retailer struggled to assemble computer systems to start new projects and features. Once it built a common computer infrastructure, Amazon realized other companies needed similar capabilities.

Now companies like Airbnb and General Electric essentially rent computing from Amazon — otherwise known as using the “cloud” — instead of buying and running their own systems. Businesses can then store their information on Amazon machines, pluck data from them and analyze it.

For Amazon itself, A.W.S. has become crucial. The division generated $25 billion in sales last year — roughly the size of Starbucks — and is Amazon’s most profitable business. Those profits enable the company to plow money into many other industries.

In a statement, Amazon said the idea that it was strip-mining software was “silly and off-base.” It said it had contributed significantly to the software industry and that it acted in the best interest of customers.

Some tech companies said they had found more customers through A.W.S.; even some companies that have tangled with Amazon have grown. Elastic, for instance, went public last year and now has 1,600 employees.

But in interviews with more than 40 current and former Amazon employees and those of rivals, many said the costs of what the company was doing with A.W.S. were hidden. They said it was hard to measure how much business they had lost to Amazon, or how the threat of Amazon had turned off would-be investors. Many spoke on the condition of anonymity for fear of angering the company.

In February, seven software chief executives met in Silicon Valley and discussed bringing an antitrust lawsuit against the giant, said four people with knowledge of the gathering. Their grievances echoed a complaint by vendors who use Amazon’s shopping site: Once Amazon becomes a direct competitor, it is no longer a neutral party.

The C.E.O.s did not press forward with a legal action, partly out of concern that the process would take too long, the people said.

Now regulators are approaching some of Amazon’s software rivals. The House Judiciary Committee, which is investigating the big tech companies, asked Amazon in a September letter about A.W.S.’s practices. The Federal Trade Commission, which is also investigating Amazon, has questioned A.W.S. competitors, according to officials at two software companies who were called in but were not authorized to discuss the matter.

What Amazon is doing to software start-ups is unsustainable, said Salil Deshpande, founder of Uncorrelated, a venture capital firm.

“It has intercepted their monetization, it has forcibly wrestled control of software from their owners and it has siphoned customers to its own proprietary services,” he said.

When Amazon Web Services began last decade, Amazon was struggling to turn a consistent profit. A service to provide computing power seemed like a distraction.

Yet start-ups embraced A.W.S. They saved money because they did not need to buy their own computing equipment, while spending only on what they used. Soon more companies flocked to Amazon for computing infrastructure and, eventually, the software that ran on its machines.

In 2009, Amazon established a template for accelerating A.W.S.’s growth. That year, it introduced a service for managing a database, which is critical software to help companies organize information.

The A.W.S. database service, an instant hit with customers, did not run software that Amazon created. Instead, the company plucked from a freely shared option known as open source.

Open-source software has few parallels in business. It is akin to a coffee shop giving away coffee on the hopes that people spend on milk or sugar or pastries.

But open source is a tried and true model nurtured by the software industry to get technology to customers quickly. A community of enthusiasts often springs up around the shareable technology, contributing improvements and spreading the word about its benefits. Traditionally, open-source companies later earn money for customer support or from paid add-ons.

Technologists initially paid little attention to what Amazon had done with database software. Then in 2015, Amazon repeated the maneuver by copying Elasticsearch and offering its competing service.

This time, heads turned.

“There was a company that built a business around an open-source product that people like using and, suddenly, they have a competitor using their own stuff against them,” said Todd Persen, who started a non-open-source software company this year so there was “zero chance” that Amazon could lift his creations. His previous start-up, InfluxDB, was open source.

Again and again, the open-source software industry became a well that Amazon turned to. When it copied and integrated that software into A.W.S., it didn’t need permission or have to pay the start-ups for their work, creating a deterrent for people to innovate.

That left little recourse for many of these companies, which could not suddenly start charging money for what was free software. Some instead changed the rules around how their wares could be used, restricting Amazon and others who want to turn what they have created into a paid service.

Amazon has worked around some of their changes.

When Elastic, now based in Silicon Valley, shifted the rules for its software last year, Amazon said in a blog post that open-source software companies were “muddying the waters” by limiting access to certain users.

Shay Banon, Elastic’s chief executive, wrote at the time that Amazon’s actions were “masked with fake altruism.” Elastic declined to make Mr. Banon available for an interview.

Last year, MongoDB, a popular technology for organizing data in documents, also announced that it would require any company that manages its software as a web service to freely share the underlying technology. The move was widely viewed as a hedge against A.W.S., which does not openly share its technology for creating new services.

A.W.S. soon introduced its own technology with the look and feel of MongoDB’s older software, which did not fall under the new requirements.

That experience was top of mind this year when Dev Ittycheria, MongoDB’s chief executive, attended the dinner with the heads of six other software companies. Their conversation, held at the home of a Silicon Valley venture capitalist, shifted to something drastic: whether to publicly accuse Amazon of behaving like a monopoly.

At the meal, which included the heads of the software firms Confluent and Snowflake, some of the C.E.O.s said they faced an uneven playing field, according to the people with knowledge of the gathering. No complaint has materialized.

“A.W.S.’s success is built on strip-mining open-source technology,” said Michael Howard, chief executive of MariaDB, an open-source company. He estimated that Amazon made five times more revenue from running MariaDB software than his company generated from all of its businesses.

Andi Gutmans, an A.W.S. vice president, said some companies wanted to be “the only ones” to make money off open-source projects. He said Amazon was “committed to making sure that open-source projects remain truly open and customers get to choose how they use that open-source software — whether they choose A.W.S. or not.”

By the time A.W.S. held its first developer conference in 2012, Amazon was no longer the only big player in cloud computing. Microsoft and Google had introduced competing platforms.

So Amazon unveiled more software services to make A.W.S. indispensable. In a speech at the event, Andy Jassy, the head of A.W.S., said it wanted to “enable every imaginable use case.”

Amazon has since added A.W.S. services at a blistering pace, going from 30 in 2014 to about 175 as of December. It also built in a home-field advantage: simplicity and convenience.

Customers can add new A.W.S. services with a single click and use the same system to manage them. The new service is added to the same bill and requires no extra permission from a finance or compliance department.

In contrast, using a non-Amazon service on A.W.S. is more complicated.

Today when a customer logs onto A.W.S., they see a home page called the management console. At the center is a list of about 150 services. All are A.W.S.’s own products.

When someone types “MongoDB,” the search results do not fetch information for MongoDB’s service on A.W.S.; it instead suggests an offering from Amazon that is “compatible with MongoDB.”

Even after a customer has selected a non-Amazon option, the company sometimes continues pushing its own product. When someone creates a new database, they are presented an ad for Amazon’s own technology called Aurora. If they pick something else, Amazon still highlights its option as “recommended.”

Mr. Gutmans said A.W.S. worked closely with many companies to integrate their offerings “as seamlessly as possible.”

Amazon’s A.W.S. developer conference is now one of the world’s biggest technology events, drawing tens of thousands of people to Las Vegas every year.

The highlight is a speech from Mr. Jassy where he showcases new services. Because a new A.W.S. feature often spells hardship for some start-up, the presentation has earned the nickname “The Red Wedding,” a bloody event in a “Game of Thrones” episode.

“Nobody knows who is going to get killed next,” said Corey Quinn of the Duckbill Group, who helps companies manage their A.W.S. bills and writes a newsletter called “Last Week in A.W.S.

At last year’s conference, Amazon unveiled a new tool — Amazon CloudWatch Logs Insights — to help customers analyze information about its services.

Daniel Vassallo, a former A.W.S. software engineer who helped develop the product, said executives wanted to go after the market, but were worried it would look like Amazon was targeting a company called Splunk, which offers a similar tool and is also a major spender with A.W.S.

So Amazon previewed its new product to Splunk before the conference and agreed not to announce it during Mr. Jassy’s speech, Mr. Vassallo said.

“They weren’t particularly happy. Who would be?” Mr. Vassallo, who left Amazon in February, said of Splunk. “But we still went ahead and did it anyway.”

Splunk said it had a “strong partnership” with A.W.S. and declined to comment further.

Amazon has also created rules for its developer conference. Companies that pay tens of thousands or hundreds of thousands of dollars for a booth said they must submit their banners, pamphlets and news releases to Amazon for approval.

According to an A.W.S. document from August explaining marketing guidelines for companies it works with, Amazon bans certain words or phrases, such as “multi-cloud,” the concept of using two or more cloud platforms. An Amazon spokesman said it had stopped this practice.

Companies are also instructed to strike claims about being “the best,” “the first,” “the only,” “the leader,” unless substantiated by independent research.

Redis Labs was founded in 2011 in Tel Aviv, Israel, to build a business around managing a free software called Redis, which people use to organize and update data quickly. Amazon soon offered a competing paid service.

While that created a formidable rival to Redis Labs, Amazon’s move also validated Redis technology. The start-up has since raised $150 million, exemplifying the can’t-live-with-can’t-live-without relationship that many software companies have with Amazon.

Former Redis Labs employees estimate that Amazon generates as much as $1 billion a year from Redis technology — or at least 10 times more revenue than Redis Labs. They said Amazon also tried to poach its staff and undercut it with hefty discounts.

A.W.S. offers a discount to customers who commit to spending at least a certain amount with it, but it does not treat money spent on A.W.S.’s own services and rival services equally. Spending on outside services counts as only 50 cents on the dollar toward the balance. And discounts do not apply to non-Amazon products, according to A.W.S. customers.

If a customer still chooses Redis Labs through A.W.S., Redis Labs is required to kick back around 15 percent of its revenue to Amazon.

At one point, Amazon’s attempts to hire Redis Labs employees became so aggressive that executives removed some online biographies of its technical staff, said the former employees. A Redis Labs spokesman said the start-up had no recollection of that.

Some Redis Labs executives considered bringing an antitrust action against Amazon this year, the former employees said. Others balked because 80 percent of the start-up’s revenue came from customers on A.W.S.

“It was a love-hate relationship,” said Leena Joshi, a former vice president of marketing at Redis Labs. “On one hand, most of our customers ran on A.W.S. so it was in our interest to be tightly integrated with them. At the same time, we knew they were taking away our business.”

Redis Labs declined to comment on its revenues or A.W.S. actions. It said Amazon offered “important services.”

Not every company views A.W.S. as a threat. Ali Ghodsi, chief executive of Databricks, a San Francisco start-up that uses artificial intelligence to analyze data, said A.W.S. salespeople have lifted sales of his company’s products.

“I don’t see them using shenanigans to stop us,” he said.

But Saket Saurabh, chief executive of Nexla, a 14-person start-up in Millbrae, Calif., said he had reservations about Amazon.

In August, Amazon began a service for processing and monitoring data that competes with Nexla. Investors warned him about sharing too much information with the giant.

Mr. Saurabh went ahead anyway and signed his company up to work with Amazon in September. The reason? Amazon’s giant sales teams can give Nexla access to a vast audience.

“What choice do we have?” he said.