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Startups Using Unethical Practices Against Competitors: A Glimpse into Dark Business Tactics

Entrepreneurs are under immense pressure to succeed and stand out amidst the sea of emerging businesses. While the majority opt for hard work, innovation, and ethical business practices, there's a shadowy side to this world. Some startups engage in unethical practices to get ahead of their competitors. Author Frederik Van Lierde • Tuesday, October 31, 2023 Startups Using Unethical Practices Against Competitors: A Glimpse into Dark Business Tactics

Table of Content

Defining Unethical Practices

Unethical practices in business can range from false advertising, spreading malicious rumors about competitors, sabotaging competitors' operations, stealing trade secrets, and many other deceitful tactics. These tactics not only tarnish the reputation of the business world but can also have serious consequences for the affected companies and the industry as a whole.

Uber vs Waymo

One of the most high-profile examples of alleged unethical practices involving startups (or rather, tech giants that once were startups) is the case between Uber and Waymo. Waymo, a subsidiary of Alphabet Inc. (Google's parent company), specializes in self-driving technology. In 2017, Waymo sued Uber, accusing the latter of stealing its trade secrets.

The heart of the controversy revolved around Anthony Levandowski, a former Waymo engineer who had moved to Uber. Waymo alleged that Levandowski downloaded over 14,000 confidential and proprietary files related to Waymo's self-driving technology just before resigning. Later, he started his own self-driving truck company, Otto, which was swiftly acquired by Uber for $680 million. Waymo contended that Uber's rapid advancement in self-driving tech was not coincidental but a result of the stolen files.

The lawsuit had the potential to cripple Uber's efforts in the autonomous vehicle race. However, in 2018, before the case could go to trial, the companies settled, with Uber agreeing to provide Waymo 0.34% of its equity, roughly valued at $245 million at that time. Furthermore, Uber pledged not to use Waymo's confidential information in its self-driving technology.

The Implications
The Uber-Waymo case showcases the lengths some companies may go to, or at least the murky waters they might find themselves in, to get ahead of the competition. Such practices not only jeopardize the reputation of the companies involved but also bring legal repercussions, monetary losses, and missed opportunities.

Moreover, these incidents can serve as cautionary tales for other startups. While it's natural for businesses to desire an edge over competitors, resorting to unethical means is short-sighted and potentially destructive. The best startups achieve success not by cutting corners but by innovating, persevering, and building trust.

Snapchat vs. Peek

In 2015, a controversy arose between Snapchat and a smaller startup called Peek. Peek developed an app that allowed users to get a "peek" into what's happening in various locations across the world, showing unedited, real-life snippets – not so different from Snapchat's Story feature, but specifically geographically-centric.

The Controversy:
Peek founders alleged that Snapchat had used unethical tactics to suppress them as a potential competitor. According to Peek, Snapchat invited them for a meeting under the guise of potential collaboration or acquisition. During this meeting, Peek shared insights into their operations, growth strategies, and more. However, instead of a partnership or acquisition, Snapchat, a few weeks later, launched a very similar feature called "Snap Map."

Peek's founders claimed that Snapchat had feigned interest in acquiring them just to gather intelligence and subsequently launch a competing feature. Whether or not Peek would have succeeded on its own is uncertain, but Snapchat’s move certainly didn't help the smaller company's prospects.

Facebook vs. Houseparty

Houseparty was a live group video chat app that gained significant traction among teenagers and young adults. As with most successful social apps, it caught the attention of tech giant Facebook.

The Controversy: Houseparty's CEO, Ben Rubin, shared in interviews that Facebook tried to clone their app after they declined a potential acquisition offer. According to Rubin, Facebook invited the Houseparty team for a meeting, similarly to the Snapchat-Peek situation. After the meeting, Facebook launched its group video chat feature, called Bonfire, which was eerily similar to Houseparty's offering.

While big companies like Facebook have the resources to quickly launch features similar to those of rising startups, the ethics of such practices remain questionable. In the world of tech, where "borrowing" features is not uncommon, the line between inspiration and imitation is often blurred. However, small startups can find it challenging to compete when larger entities adopt their unique selling points.

Tinder vs. Bumble

Both Tinder and Bumble are among the top contenders in the list of dating apps. While Tinder revolutionized the mobile dating game with its "swipe" feature, Bumble came up with a unique selling point: allowing women to make the first move.

The Controversy:
In 2018, Match Group, the parent company of Tinder, sued Bumble, alleging patent infringement and stealing trade secrets. The lawsuit claimed that Bumble copied Tinder's design and functionality, particularly the swipe-based mutual matching system. Furthermore, Match alleged that some of Bumble's key staff, former Tinder employees, had taken confidential information from Tinder.

Bumble responded with a public counter-argument, calling the lawsuit an intimidation tactic. Bumble's leadership alleged that Match Group had tried to acquire Bumble and, failing that, resorted to litigation to harm their competitor. Bumble later countersued Match Group, accusing them of fraud and attempting to devalue Bumble for a potential acquisition.

The lawsuits showcased the high stakes and intense rivalries in the competitive world of mobile apps and how companies might use litigation as a tactic against competitors.


The business world, including the startup ecosystem, thrives on competition. It's this competition that drives innovation and delivers better products and services to consumers. However, there's a fine line between healthy competition and unethical conduct. The latter might offer temporary gains but will invariably harm the business, industry, and stakeholders in the long run. Startups must uphold the highest ethical standards, setting the tone for generations to come.

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