Amazon and India’s top seller Cloudtail end relationship amid regulatory heat

NEW DELHI, Aug.9 (Reuters) – Amazon.com Inc (AMZN.O) and one of its biggest sellers in India, Cloudtail, have decided to end their relationship, they announced on Monday after years. claims of brick and mortar retailers that the seller was given preferential treatment.

A joint venture between Amazon and the Indian Catamaran that controlled Cloudtail was due to be renewed on May 19, 2022, and the two sides said in a joint statement that they had mutually agreed not to extend it beyond that. dated.

The move comes after a Reuters investigation in February based on Amazon documents showed the U.S. company had given preferential treatment for years to a small group of sellers, including Cloudtail, and used them to circumvent Indian laws.

Amazon said it does not give preferential treatment to any seller and that it follows the law.

In their joint statement, Amazon and Catamaran did not explain why they decided to end their joint venture, but said the partnership had operated successfully for seven years and made “considerable progress.”

Cloudtail had been controversial, with Indian brick-and-mortar retailers for years accusing Amazon of giving it preferential treatment that hurt small retailers.

It was formed when Amazon formed a joint venture with an entity formed by one of India’s most famous tech moguls, NR Narayana Murthy, which was then used to create Cloudtail, which began offering products on Amazon.in after its inception in August 2014..

Reuters’ investigation in February found that Amazon publicly referred to Cloudtail as an independent seller offering products on its Marketplace website, but internal company documents revealed that the U.S. company was deeply involved in its expansion and used it, among other sellers, to circumvent the country’s foreign investment laws.

The story had sparked calls for an Amazon ban and investigation, and the financial crime agency was reviewing its findings. The antitrust watchdog had said the story corroborated the evidence it had against Amazon.

Arvind Singhal, chairman of retail consultancy Technopak Advisors, told Reuters that the move by Amazon and Catamaran appeared to be aimed at defending against any possible future scrutiny of their business models.

“Before it gets any further scrutiny, they basically disengage. But given that the relationship has been around for years, it will remain like a sword on its head,” Singhal said.

India is a key growth market for Amazon, where it has committed $ 6.5 billion in investments. But this is where he faced several regulatory challenges, including tougher laws that apply to foreign e-commerce giants.

Reuters’ investigation in February found that Amazon had offered Cloudtail and another seller named Appario reduced fees.

Amazon is also in talks with Appio’s parent company to determine whether it wants to renew its joint venture next year, a directly-informed source told Reuters on Monday. Appario did not respond to a request for comment.

The source added that several sellers in India were likely to take over Cloudtail’s share on Amazon.in over time.

“There will be challenges, but the company is pretty confident it will succeed,” the source added.

Separately, the Indian Supreme Court ruled on Monday that Amazon and Walmart (WMT.N) Flipkart will face ordered antitrust investigations against them in India, dealing a blow to companies in their key growth market.

Reporting by Aditya Kalra in New Delhi Editing by Mark Potter and Jonathan Oatis

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