Fate Of One Of Largest Online Sellers In Doubt As Murthy, Amazon Agree To Part Ways
The fate of Cloudtail, one of the largest sellers on Amazon's India online marketplace, is in doubt as the e-commerce giant's local unit and NR Narayana Murthy's Catamaran Ventures won't renew their partnership amid increasing anti-trust scrutiny of marketplaces.
Prione Business Services Pvt., the joint venture between Amazon India (24%) and Catamaran (76%), will not be renewed beyond the end of its current term on May 19, 2022, the two partners said in a joint statement on Monday. Cloudtail is a wholly-owned subsidiary of Prione.
Neither Amazon nor Catamaran have explained why they are allowing the join venture to end or what the consequences will be for Cloudtail.
To be clear, Amazon and Walmart-owned Flipkart Internet Pvt. are facing increased scrutiny in the country with regard to compliance with foreign direct investment rules and allegations of anti-competitive behaviour by offering deep discounts and preferential treatment to some sellers. On Monday, India’s Supreme Court allowed an antitrust investigation against the two. The firms have been given four weeks to respond to the notices from the Competition Commission of India.
Two years ago, Cloudtail had ceased selling on Amazon India to comply with a foreign direct investment rule that an overseas entity running a marketplace, or its group companies, cannot have equity participation in any of the sellers or have control over inventory. Cloudtail returned after Amazon Asia reduced its stake from 49% to 24% in parent company Prione.
Still, Cloudtail and other sellers have been repeatedly accused of violating FDI rules by the Confederation of All India Traders.
Amazon and Catamaran said in their statement that the joint venture has enabled more than 300,000 sellers entrepreneurs to go online and helped four million (40 lakh) merchants get digital payment capabilities.
“Amazon and Catamaran entered into a JV in the early days of e-commerce in India with a shared vision of transforming hundreds of thousands of small businesses in a fast-changing digital world, by providing online capabilities enabling them to access customers both in India and globally,” Amit Agarwal. Amazon India’s country head and global Senior vice president, said in the statement.