Cloudtail To Cease Operation With Amazon, Narayana Murthy Ends 7-Yr Deal Amid Anti-Trust Probe: Report

The decision comes after a Reuters investigation based on Amazon documents showed the US company had given preferential treatment to a small group of sellers, including Cloudtail.

Amazon

New Delhi: It’s the end of an association between Amazon.com Inc and one of its biggest sellers in India, Cloudtail, before the renewal of their partnership which was coming up on May 19.

A joint venture between Amazon and India's Catamaran called Prione Business Services Ltd, the parent of Cloudtail India announced the development through a joint statement they had mutually decided not to extend the contract beyond that date.

What Prompted The End?

The decision about the non-renewal of contract comes after years of allegations and Reuters investigation in February based on Amazon documents that showed the US company had given preferential treatment for years to a small group of sellers, including Cloudtail, and used them to bypass Indian laws, as per the agency.

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On the other hand, Amazon insisted on not offering preferential treatment to any seller and that it complies with the law. It comes on the back of the Supreme Court ruling that e-commerce giants Amazon and Flipkart will continue to face an antitrust investigation by the Competition Commission of India (CCI), dismissing pleas by the companies to quash the probe.

Although both the companies Amazon and Catamaran did not clearly give any reasons for ending the ties but said the partnership ran successfully for seven years and made "tremendous strides."

Cloudtail India Pvt. Ltd will cease to exist operations in May next year. It had attracted criticism with Indian brick-and-mortar retailers accusing Amazon of giving it preferential treatment which went on to hurt smaller retailers.

The joined venture of Cloudtail came into being after Amazon entered a partnership with an entity formed by none other than tech mogul N R Narayana Murthy. The company started offering goods on Amazon.in after it was set up in August 2014.

According to the Reuters probe conducted in February, it discovered Amazon had publicly named Cloudtail an independent seller offering goods on its marketplace website, but the internal company documents revealed the US etailer was working towards expanding it and used it, among other sellers, to circumvent the country's foreign investment laws.

The revelation prompted a ban besides the investigation of Amazon, and the other agencies looking into its findings.

The investigation also found Amazon that gave another seller named Appario, discounted fees. Amazon is considering whether to renew its joint venture next year talks with the parent of Appario, as per Reuters report. With this move, multiple sellers in India will get a chance to grab Cloudtail's share on Amazon.in overtime.

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