A joint venture between companies founded by two billionaires – Jeff Bezos’ Amazon and Infosys founder Narayana Murthy – is coming to an end after both holding companies decided not to renew it.
Cloudtail, which is controlled by Amazon and the Murthy-owned Catamaran, said in a joint statement they had mutually decided not to extend it beyond May 19, 2022, the date of renewal.
“When the JV with Amazon reaches the end of its term, we look back on this successful partnership that introduced the power of digitisation and empowered hundreds of thousands of SMBs across large and small towns,” said MD Ranganath, the president of Catamaran.
Global Senior Vice President and Country Head of Amazon India. Amit Agarwal, added: “Amazon and Catamaran entered into a JV in the early days of e-commerce in India with a shared vision of transforming thousands of small businesses in a fast-changing digital world, by providing online capabilities enabling them to access customers both in India and globally.
“This JV goes beyond vision, supports the evolution of online commerce through the tireless efforts of hundreds of employees, has a positive impact on more than 4.3 million SMEs, creates hundreds of thousands of jobs and creates hundreds of thousands of jobs in India. We are humble in contributing to the digital economy. We are honored to have a partner that we can learn and rely on.”
While the statements did not give the real reason, it is believed that the company was facing the heat from Indian regulators for circumventing laws and for preferential treatment to sellers on the platform.
A Reuters investigation in February, based on Amazon documents, showed the company had given preferential treatment for years to a small group of sellers, including Cloudtail, and used them to bypass Indian laws. Amazon said it does not give preferential treatment to any seller and that it complies with the law.
The announcement came on a day when the Indian Supreme Court threw out a petition by Amazon and Flipkart and asked the Competition Commission of India (CCI) to continue its antitrust investigation against the companies.
Amazon has come under fire in India for business practices that small retailers contend are unfair and illegal. The CCI started a probe last year into the company and Walmart-owned Flipkart after local retailers alleged the companies abused their dominance through deep discounts, exclusive tie-ups and favorable backing of certain vendors.
Amazon and Catamaran first set up a company called Prione in 2014, a year after Amazon began selling in India, with 51% majority holding for Catamaran Ventures, with the aim of training and bringing new sellers to the Amazon platform, reports Bloomberg.
Prione then set up a fully-owned unit called Cloudtail that sold goods online alongside the independent shops. It grew to be one of the largest sellers on Amazon, with premium brands like Apple and OnePlus. India later changed its regulations to bar platforms from selling products from affiliates or giving favorable treatment to related businesses.
The rules currently prohibit a foreign entity running an online marketplace and its group companies from owning equity in any of the sellers on the platform or having control over their inventory. Because of this, Amazon had to reduce its stake from 49% to 24% in Cloudtail and Appario, the two top sellers on its marketplace.
