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Wal-Mart busts Amazon in ‘espionage’ case

The trad retail giant says the e-commerce guys have been playing fast and loose with its systems

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US retail giant Wal-Mart is suing Amazon and another Internet sales operation, Drugstore.com, claiming theft of trade secrets. Remarkably, the highly traditional low-cost chain founded by Sam Walton is suing on the grounds that it thinks the e-commerce outfits have been trying to swipe the secrets of its computer systems. But there are clear grounds for Wal-Mart to be suspicious. The company says about 15 staff have been hired away from it, and that these are people with knowledge of its Retailink system, which is used to monitor purchases in Wall-Mart stores and then feed the data back to suppliers. And although Wal-Mart looks conservative, its logistical and inventory computer systems are among the best in the business. This is one of the logistical and reporting areas that online vendors are going to have to crack if they're going to first duplicate and then supplant the services provided by conventional store chains. The Wall-Mart suit also refers to Silicon Valley VC outfit Kleiner Perkins Caufield & Byers, which funded the two companies from start-up and was involved in drawing up their business plans. So will the darlings of the Valley come out of this smelling of ordure? One of Wal-Mart's key questions is how come the glossy Californians have been hiring people from its HQ, which is in somewhat less glossy Arkansas. Obviously the answer is because they knew about and were good at the kinds of systems the companies needed to put in place. The question will be, did they know too much? ® Click for more stories

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