Amazon.com, Inc. (NASDAQ:AMZN) Web Services has sued Gene Farrell, its former executive who left to join Smartsheet, a business software company located in Seattle. According to Amazon’s court filings, Farrell breached a non-compete that he signed with the company when he left to join Smartsheet. Farrell joined Smartsheet on June 1, 2017 as the company’s senior vice president of products.
Many candidates in the tech industry have signed a non-compete agreement as a condition of employment which prohibits them from working for rival companies or rival products for a certain period of time after leaving their current employment.
According to Amazon Web Services, Farrell, who was hired five years ago, and rose in the ranks to become the company’s vice president of enterprise applications still has all the information regarding its products and programs and cannot therefore work for a rival company.
Smartsheet is engaged in selling group collaboration software will allows teams to plan their projects and exchange information. Some parts of Smartsheet’s software run on Amazon’s infrastructure.
In a statement, Smartsheet CEO Mark Mader says Amazon is a strong competitor and startups should be careful when they hire its former employees. Mader adds that before his company hired Farrell a lot of research and evaluations were done to ensure no legal impediment was in the way.
Amazon Web Serviceswas started 11 years and is engaged in renting basic networking, computing and storage data center resources to its customers. The company has however been developing its software portfolio so as to widen its competitive edge. The company unveiled WorkMail email two years ago before recently launching the Chime conference calling software. The company’s main competitors are Alphabet Inc (NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT).
According to Mader, his company is more of a partner than a competitor to other workplace software companies like Microsoft, G Suite, Google, Office 365 and its own Workdocs.
Mader says the Smartsheet main objective is to work cordially with other software companies which offer communication, storage and content creation services. There is a heated debate in the tech industry concerning non-compete agreements with its critics saying many companies are using these agreements to prevent talented employees from joining rival companies.
Amazon is one of the leading tech companies in the U.S that have suffered a recent drop in the value of its shares. The slump led to a cumulative loss of over $140 billion by five leading tech companies. The stock closed the Monday session with a -1.38% or – $13.48 drop to trade at $964.91