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Peak Design has been making camera bags and accessories for a dozen years, relying on Amazon for the bulk of its sales. Last year, founder and CEO Peter Dering discovered Amazon was selling a bag that looked strikingly similar to Peak’s top-selling product, the Everyday Sling Bag.

“They copied the general shape, they copied the access points, they copied the charcoal color, and they copied the trapezoidal logo badge,” Dering told CNBC. “But none of the fine details that make it a Peak Design bag were things that they could port over because those things take a lot more effort and cost.”

Amazon even snagged the name, calling its own product the Everyday Sling.

What Amazon lacked in originality and quality it made up for in price. While Peak’s bag currently costs almost $90 on Amazon, the knockoff version from Amazon’s homegrown AmazonBasics brand was selling for about two-thirds less.

That motivated Dering’s team to respond with a snarky video, poking fun at Amazon’s questionable methods.

“You don’t have to pay for all those needless bells and whistles, like years of research and development, recycled bluesign-approved materials, a lifetime warranty, fairly paid factory workers and total carbon neutrality,” a man’s voice said in the video. “Instead, you just get a bag designed by the crack team at the AmazonBasics Department.”

The video went viral and in June was featured by HBO’s John Oliver in a segment on tech monopolies. Amazon later stopped selling its version of the bag, after Peak Design fans pummeled its ratings with a flurry of negative reviews.

Peak Design CEO Peter Dering compares his company’s Everyday Sling Bag to the Amazon private label version at his San Francisco headquarters on September 6, 2022.

Katie Schoolov

For Amazon, whose expansive marketplace is in the crosshairs of regulators that are cracking down on Big Tech, stories like these from its private-labels division have caused added headaches. In 2020, the European Commission charged Amazon with using its size, power and data to push its own products and gain an unfair advantage over rival merchants that also use its platform. Earlier this year, Amazon said it would limit its use of marketplace seller data.

Meanwhile, the attorney general of California has filed an antitrust suit against Amazon, and the American Innovation and Choice Online Act being considered by Congress would crack down on Big Tech’s ability to leverage dominant market power at the expense of small businesses. The bill has yet to make it to a vote

But while Amazon may be pushing the boundaries of what’s acceptable in private labeling, there’s nothing illegal about copying brand-name products. It’s a business practice that, in some capacity, is widely used by most major retailers.

A selection of some of Amazon’s 118+ private label brands as of October, 2022.

Mallory Brangan

‘Low price’ and ‘acceptable quality’

A private label is just like a store brand. A retailer finds a manufacturer to make an affordable “white label” version of a branded product. The manufacturer puts the retailer’s own brand on the packaging, and it then sells for an average of 25%-40% less than the national brand-name product, according to Kusum Ailawadi, a marketing professor at Dartmouth College who’s been researching private labels for 25 years.

“The history of private label, in the U.S. anyway, is very much a perception of low price and at best acceptable quality,” said Ailawadi, adding that the model dates as far back as the 1950s.

Retailers more recently have tried to change the view of store brands by focusing on something that captures a consumer’s interest. For example, Safeway has an O Organics brand and Kroger offers a line of baby products called Comforts.

Others put most of their products under store brands, such as Walmart‘s Great Value and Sam’s Choice lines or Costco‘s Kirkland Signature. In other cases, store names double as brand names, such as CVS and Trader Joe’s. Many such products are copycats.

“They will put it next to the national brand with whom they are trying to compete, with a me-too packaging, a similar look and then even have a big sign that says, ‘Buy basically the same product or better at 30% lower price,'” Ailawadi said. “Some of the practices around private label that are now under scrutiny by Congress and other people have not only been around a long time, they are perfectly acceptable practices.”

But Amazon is doing something different, according to Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, an activist group that fights big corporations. She said Amazon brings a powerful data engine to the table.

“Amazon has developed a lot of these private labels by gathering data, essentially spying on the companies that have to rely on its website in order to reach consumers,” Mitchell said. “They also know what search terms people are using, what they’re clicking on, how long their mouse is hovering in a certain place. And so they are able to analyze all of that data for a level of insights that simply are not available to your typical chain retailer.”

Amazon also has more power to steer shoppers to particular products than a typical brick-and-mortar retailer.

Amazon has the “ability to take one particular product and shove it on page 10 of the search results while giving another product, say, their own product, lots of space right there on the first page of search results,” Mitchell said. “We know that really alters and steers buying behavior.”

In 2020, Congress questioned Amazon founder and then-CEO Jeff Bezos about whether his company uses third-party seller data in making business decisions.

“We have a policy against using seller specific data to aid our private-label business,” Bezos said. “But I can’t guarantee you that policy has never been violated.”

An Amazon spokesperson told CNBC in September, “We do not use data about individual sellers that isn’t public to determine which private brand products to launch, and we have a policy to protect seller data that goes further than any other retailer we know of.”

How private labels are made is often shrouded in mystery, leading to speculation around certain products. For instance, Grey Goose has had to dispel rumors that it makes Costco’s Kirkland Signature vodka.

Ailawadi said some private labels are made by national brand manufacturers, who use their excess capacity to make products for others. Then there are specialty firms that only do private labels, and some store brands have their own devoted manufacturing facilities. Although Amazon released a list of more than 100 suppliers in 2019, it didn’t respond to questions about who makes its private labels today.

AmazonBasics batteries are shown on September 29, 2022.

Andrew Evers

Amazon first entered the private-label business around 2009, with its AmazonBasics brand of staple goods such as discount batteries. It now has at least 118 private-label brands, according to data from e-commerce analyst company DataWeave. Some of its brands carry the Amazon name or logo, such as Happy Belly snacks, Amazon Collection jewelry and Amazon Essentials clothing. Others such as Solimo home products and clothing lines Lark & Ro and Goodthreads give little indication they’re Amazon brands.

Private labels make up just 3% of Amazon’s sales volume by dollar share in grocery, household and health and beauty categories, according to a recent study by Numerator. By comparison, private labels make up a whopping 77% of Aldi’s sales, followed by Trader Joe’s at 59% and Wegmans at 49%. 

Amazon continues to invest in private labels

Numerator data also found that AmazonBasics came in third for fastest-growing private label. That comes after a Wall Street Journal report that found Amazon drastically reduced the number of private-label items on its site in the first half of this year. The Journal reported that executives had discussed exiting the private-label business entirely to ease antitrust scrutiny.

In a statement, Amazon disputed that notion.

“We never seriously considered closing our private label business, and we continue to invest in this area, just as our many retail competitors have done for decades and continue to do today,” the company said.

Private labels clearly represent a lucrative opportunity. Target told CNBC that 12 of its 48 “owned brands” are each worth at least $1 billion. 

Although Amazon doesn’t share sales data on individual brands, seller consultant Jason Boyce from Avenue7Media said internal data from his firm shows that Amazon sells tens of millions of dollars in AmazonBasics batteries each month.

“I don’t think that there’s any credence to the fact that Amazon’s sunsetting AmazonBasics products that are doing well,” Boyce said. “Are they culling the herd for products that are doing not so well? Absolutely. And any good business would do that.”

Ailawadi says private-label goods bring in around 25% higher profit margins for retailers than national brands, because of savings on things such as packaging, marketing and promotion.

A variety of Amazon’s private label goods are shown on September 29, 2022.

Andrew Evers

“There is nothing anti-competitive about comparing one product with another and saying that these products are very similar, and I’m selling you one at a lower price,” Ailawadi said. “That is as competitive as it gets.”

Internally, Amazon has to skate a fine line between creating profitable products that consumers want and protecting third-party sellers, who have become the lifeblood of the retail business. Amazon says third-party merchants make up more than 60% of its ecommerce business, and those businesses pay Amazon for services such as fulfillment and shipping.

Boyce said that “45% of every dollar goes back to Amazon” when an outside merchant makes a sale on the platform. “Why would they bite the hand that feeds them in that way?”

Not all of Amazon’s private-label efforts succeed. The company no longer sells a pair of shoes called the Galen that look eerily similar to AllBirds’ wool running shoes. With the Everyday Sling Bag, Dering says Peak Design came out on top thanks to all the media attention.

Dering has also learned one key lesson from the Amazon drama. He now gets a design patent for every one of Peak Design’s products, which number over 200. Each patent costs about $1,000, he said.

“I really recommend that for anyone who’s bringing a product that they don’t want to be knocked off,” Dering said.

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Inside one of the first all-female hacker houses in San Francisco

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Inside one of the first all-female hacker houses in San Francisco

For Molly Cantillon, living in a hacker house wasn’t just a dream, but a necessity.

“I had lived in a few hacker houses before and wanted to replicate that energy,” said Cantillon, 20, co-founder of HackHer House and founder of the startup NOX. “A place where really energetic, hardcore people came together to solve problems. But every house I lived in was mostly male. It was obvious to me that I wanted to do the inverse and build an all-female hacker house that created the same dynamic but with women.”

Cantillon, who has lived in several hacker houses over the years, saw a need for a space dedicated exclusively to women. That’s why she co-founded HackHer House, the first all-female hacker house in the San Francisco Bay Area.

“A hacker house is a shared living space where builders and innovators come together to work on their own projects while collaborating with others,” said Jennifer Li, General Partner at Andreessen Horowitz and sponsor of the HackHer House. “It’s a community that thrives on creativity and resource sharing, making it a cost-effective solution for those in high-rent areas like Silicon Valley, where talented founders and engineers can easily connect and support each other.”

Founded by Cantillon, Zoya Garg, Anna Monaco and Anne Brandes, this house was designed to empower women in a tech world traditionally dominated by men. 

“We’re trying to break stereotypes here,” said Garg, 21, a rising senior at Stanford University. “This house isn’t just about living together; it’s about creating a community where women can thrive in tech.”

Located in North Beach, HackHer House was home this summer to seven women, all of whom share the goal of launching successful ventures in tech. 

Venture capital played a key role in making HackHer House possible. With financial backing, the house offered subsidized rent, allowing the women to focus on their projects instead of struggling with the Bay Area’s notoriously high living costs.

“New grad students face daunting living expenses, with campus costs reaching the high hundreds to over a thousand dollars a month,” said Li. “In the Bay Area, finding a comfortable room typically starts at $2,000, and while prices may have eased slightly, they remain significantly higher than the rest of the U.S. This reality forces many, including founders, to share rooms or crash on friends’ couches just to make ends meet.” 

Hacker houses aren’t new to the Bay Area or cities like New York and London. These live-in incubators serve as homes and workspaces, offering a collaborative environment where tech founders and innovators can share ideas and resources. In a city renowned for tech advancements, hacker houses are viewed as critical for driving the next wave of innovation. By providing affordable housing and a vibrant community, these spaces enable entrepreneurs to thrive in an otherwise cutthroat and expensive market.

Watch this video to see how Hacker House is shaping the future of women in tech.

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Elon Musk’s X will be allowed back online in Brazil after paying one more fine

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Elon Musk's X will be allowed back online in Brazil after paying one more fine

The Federal Supreme Court (STF) in Brazil suspends Elon Musk’s social network after it fails to comply with orders from Minister Alexandre de Moraes to block accounts of those being investigated by the Brazilian justice system. 

Cris Faga | Nurphoto | Getty Images

X has to pay one last fine before the social network owned by Elon Musk is allowed back online in Brazil, according to a decision out Friday from the country’s top justice, Alexandre de Moraes.

The platform was suspended nationwide at the end of August, a decision upheld by a panel of judges on Sept. 2. Earlier this month, X filed paperwork informing Brazil’s supreme court that it is now in compliance with orders, which it previously defied.

As Brazil’s G1 Globo reported, X must now pay a new fine of 10 million reals (about $2 million) for two additional days of non-compliance with the court’s orders. X’s legal representative in Brazil, Rachel de Oliveira, is also required to pay a fine of 300,000 reals.

The case dates back to April, when de Moraes, the minister of Brazil’s supreme court, known as Supremo Tribunal Federal (STF), initiated a probe into Musk and X over alleged obstruction of justice.

Musk had vowed to defy the court’s orders to take down certain accounts in Brazil. He called the court’s actions “censorship,” and railed online against de Moraes, describing the judge as a “criminal” and encouraging the U.S. to end foreign aid to Brazil.

In mid-August, Musk closed down X offices in Brazil. That left his company without a legal representative in the country, a federal requirement for all tech platforms to do business there.

By Aug. 28, de Moraes’ court threatened a ban and fines if X didn’t appoint a legal representative within 24 hours, and if it didn’t comply with takedown requests for accounts the court said had engaged in plots to dox or harm federal agents, among other things.

Earlier this month, the STF froze the business assets of Musk companies, including both X and satellite internet business Starlink, operating in Brazil. The STF said in court filings that it viewed Starlink parent SpaceX and X as companies that worked together as related parties.

Musk wrote in a post on X at that time that, “Unless the Brazilian government returns the illegally seized property of and SpaceX, we will seek reciprocal seizure of government assets too.”

On August 29, 2024, in Brazil, the Minister of the Supreme Court, STF Minister Alexandre de Moraes, orders the blocking of the accounts of another company, Starlink, of Elon Musk, to guarantee the payment of fines imposed by the STF due to the lack of representatives of X in Brazil. 

Ton Molina | Nurphoto | Getty Images

As head of the STF, de Moraes has long supported federal regulations to rein in hate speech and misinformation online. His views have garnered pushback from tech companies and far-right officials in the country, along with former President Jair Bolsonaro and his supporters.

Bolsonaro is under investigation, suspected of orchestrating a coup in Brazil after losing the 2022 presidential election to current President Luiz Inacio Lula da Silva.

While Musk has called for retribution against de Moraes and Lula, he has worked with and praised Bolsonaro for years. The former president of Brazil authorized SpaceX to deliver satellite internet services commercially in Brazil in 2022.

Musk bills himself as a free speech defender, but his track record suggests otherwise. Under his management, X removed content critical of ruling parties in Turkey and India at the government’s insistence. X agreed to more than 80% of government take-down requests in 2023 over a comparable period the prior year, according to analysis by the tech news site Rest of World.

X faces increased competition in Brazil from social apps like Meta-owned Threads, and Bluesky, which have attracted users during its suspension.

Starlink also faces competition in Brazil from eSpace, a French-American firm that gained permission this year from the National Telecommunications Agency (Anatel) to deliver satellite internet services in the country.

Lukas Darien, an attorney and law professor at Brazil’s Facex University Center, told CNBC that the STF’s enforcement actions against X are likely to change the way large technology companies will view the court.

“There is no change to the law here,” Darien wrote in a message. “But specifically, big tech companies are now aware that the laws will be applied regardless of the size of a business and the magnitude of its reach in the country.”

Musk and representatives for X didn’t immediately respond to a request for comment on Friday.

Late Thursday, X Global Government Affairs posted the following statement:

“X is committed to protecting free speech within the boundaries of the law and we recognize and respect the sovereignty of the countries in which we operate. We believe that the people of Brazil having access to X is essential for a thriving democracy, and we will continue to defend freedom of expression and due process of law through legal processes.”

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OpenAI sees roughly $5 billion loss this year on $3.7 billion in revenue

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OpenAI sees roughly  billion loss this year on .7 billion in revenue

Sam Altman, CEO of OpenAI, at the Hope Global Forums annual meeting in Atlanta on Dec. 11, 2023.

Dustin Chambers | Bloomberg | Getty Images

OpenAI, the creator of ChatGPT, expects about $5 billion in losses on $3.7 billion in revenue this year, CNBC has confirmed.

The company generated $300 million in revenue last month, up 1,700% since the beginning of last year, and expects to bring in $11.6 billion in sales next year, according to a person close to OpenAI who asked not to be named because the numbers are confidential.

The New York Times was first to report on OpenAI’s financials earlier on Friday after viewing company documents. CNBC hasn’t seen the financials.

OpenAI, which is backed by Microsoft, is currently pursuing a funding round that would value the company at more than $150 billion, people familiar with the matter have told CNBC. Thrive Capital is leading the round and plans to invest $1 billion, with Tiger Global planning to join as well.

OpenAI CFO Sarah Friar told investors in an email Thursday that the funding round is oversubscribed and will close by next week. Her note followed a number of key departures, most notably technology chief Mira Murati, who announced the previous day that she was leaving OpenAI after six and a half years.

Also this week, news surfaced that OpenAI’s board is considering plans to restructure the firm to a for-profit business. The company will retain its nonprofit segment as a separate entity, a person familiar with the matter told CNBC. The structure would be more straightforward for investors and make it easier for OpenAI employees to realize liquidity, the source said.

OpenAI’s services have exploded in popularity since the company launched ChatGPT in late 2022. The company sells subscriptions to various tools and licenses its GPT family of large language models, which are powering much of the generative AI boom. Running those models requires a massive investment in Nvidia’s graphics processing units.

The Times, citing an analysis by a financial professional who reviewed OpenAI’s documents, reported that the roughly $5 billion in loses this year are tied to costs for running its services as well as employee salaries and office rent. The costs don’t include equity-based compensation, “among several large expenses not fully explained in the documents,” the paper said.

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