Amazon ends ties with its top seller in India on day SC cleared inquiry on ‘preferential treatment’
Retailers have long alleged that Cloudtail received preferential treatment from Amazon. On Monday, SC refused to halt an inquiry in the matter.
E-commerce platform Amazon and Cloudtail, one of its biggest sellers in India, on Monday decided not to renew their joint venture beyond the scheduled end of contract next year, Reuters reported.
The decision came on the same day as Supreme Court’s verdict refusing to halt an inquiry against Amazon and its peer in the online shopping sector, Flipkart, into allegations that they promoted selected sellers on their platforms. The Competition Commission of India had ordered the inquiry in January.
Retail sellers in India have long alleged that Cloudtail was one of the vendors which received preferential treatment from Amazon, according to Reuters.
A joint venture between Amazon and Cloudtail’s parent company Catamaran was due for a renewal on May 19, 2022. However, in a joint statement on Monday, the two entities said they had mutually decided not to extend the joint venture beyond that date. They did not mention any reason for the decision.
In February, a Reuters investigation had revealed that Amazon had “publicly misrepresented its ties” with sellers to circumvent rules dealing with foreign investment in e-commerce in India.
The report showed that Cloudtail, set up in 2014 by Infosys founder NR Narayana Murthy, accounted for 40% of Amazon’s sales in 2015 in India. The e-commerce company allegedly helped Cloudtail “acquire key relationships” with technology companies like Apple, Microsoft and OnePlus. This included exclusive deals with these companies to sell their products, such as smartphones, the report said.
Notably, findings of the Reuters investigation has similarities to the complaint filed against Amazon with the Competition Commission of India. The complaint by traders’ body Delhi Vyapar Mahasangh alleged that Amazon and Flipkart had indirect control on the operations of some vendors, especially in the case of launch of smartphones.
“Before it comes under more scrutiny, they are basically disengaging themselves,” Arvind Singhal, Chairman of retail consultancy Technopak Advisors, told Reuters. “But given the relationship has been there for years, this will still hang as a sword on their heads.”
In its February investigation, Reuters had reported that apart from Cloudtail, another seller Appario, also received discounted fees from Amazon. On Tuesday, the news agency reported that Amazon was in talks with the parent company of Appario too on whether it wants a renewal of the joint venture.