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Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. Public Security
Amazon.com Inc. lost its bid to end litigation over its alleged policy of facilitating deliveries by tampering with “smart intercom” devices at apartment complexes, although the e-commerce giant succeeded in getting parts of the case thrown out.
Judge John G. Koeltl let the lawsuit move forward Thursday, saying it’s plausible Amazon violated computer fraud laws, misappropriated trade secrets, and wrongfully interfered with GateGuard Inc.'s business by hijacking its “AI Doorman” product to facilitate building access for delivery drivers.
But the judge dismissed antitrust claims based on the theory that Amazon’s policy was part of a wider-ranging scheme to corner the market for “last mile” delivery services. The company’s Prime trucks have become a ubiquitous presence, particularly since the start of the pandemic, and it’s one of several large retailers rolling out drone deliveries.
That part of the ruling spared Amazon yet another antitrust headache as it confronts a growing wave of legal challenges to its dominance. The company is fighting a host of enforcement cases and proposed class actions targeting “most favored nation” pricing policies over claims they’ve driven up the online price of virtually everything.
It has also been accused of “self-preferencing” by rigging its algorithms to penalize third-party sellers not using its shipping and logistics services. Many of the same business practices have drawn the attention of lawmakers bringing serious antitrust scrutiny to Silicon Valley for the first time in decades.
Koeltl, writing for the US District Court for the Southern District of New York, was unpersuaded by Amazon’s arguments against the computer fraud allegations. The claim that Amazon wired its “key” into more than 40 AI Doorman products—sometimes without permission, and sometimes by duping low-level building personnel—is specific enough about which computers were tampered with, the judge said.
He also rejected the idea that Amazon’s actions didn’t count as “unauthorized access” under the relevant statute. The suit “supports the inference that, by connecting to the GateGuard device, Amazon was able to co-opt the device’s remote door-opening functionality, enabling Amazon to ‘free ride,’” Koeltl wrote.
But the antitrust count goes too far, the judge found, saying it failed to properly define a specific market—a threshold issue in most antitrust cases—that could have been warped by Amazon’s actions. It doesn’t make sense to suggest GateGuard and Amazon are competitors, he added.
“It would simply be irrational to infer that consumers would turn to GateGuard’s product, a residential intercom device, as an alternative to the package-handling and long-distance shipping services that entities like UPS, FedEx, DHL, and Amazon provide,” Koeltl wrote.
GateGuard is represented by Quainton Law PLLC. Amazon is represented by Gibson, Dunn & Crutcher LLP.
The case is GateGuard Inc. v. Amazon.com Inc., S.D.N.Y., No. 21-cv-9321, 2/16/23.
To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com
To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Maya Earls at mearls@bloomberglaw.com
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