Amazon.com and one of its biggest sellers in India, Cloudtail, have decided to end their relationship after the Supreme Court refused to stay an investigation of the Competition Commission of India into the US retail giant’s Indian operations.
Rival brick-and-mortar retailers have been continuously complaining that Amazon was giving preferential treatment to Cloudtail in violation of the country’s FDI law.
A joint venture between Jeff Bezos-led Amazon and Infosys founder N. Narayana Murthy-controlled Cloudtail was due for renewal on May 19, 2022, but the two companies said in a joint statement they had decided not to extend the partnership beyond this date.
In their joint statement, Amazon and Catamaran did not say why they had decided to end their joint venture, but said the partnership ran successfully for seven years and made "tremendous strides."
Cloudtail had been controversial, with Indian brick-and-mortar retailers for years accusing Amazon of giving it preferential treatment which hurt smaller retailers.
It was formed when Amazon entered a joint venture with an entity formed by one of India’s most famous tech moguls, N.R. Narayana Murthy, which was then used to create Cloudtail, which began offering goods on Amazon.in after it was set up in August 2014.
Amazon operates as an online marketing platform and is not allowed to sell goods of its own companies as the Indian law does not permit FDI in the retail segment.
A Reuters journalistic investigation in February found Amazon publicly called Cloudtail an independent seller offering goods on its marketplace website, but internal company documents revealed the U.S. company was deeply involved in expanding it and used it, among other sellers, to circumvent the country's foreign investment laws.
Amazon has committed an investment of $6.5 billion in the fast growing Indian organised retail market.
The Supreme Court had on Monday ruled that Amazon and Walmart's Flipkart will have to face antitrust investigations ordered against them in India, which comes as a major setback to the two big retailers in India.
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