According to a statement released on Monday, Amazon.com and Cloudtail, one of its largest sellers in India, have chosen to dissolve their business partnership. The decision follows years of complaints from brick-and-mortar shops that the seller enjoyed preferential privileges.
It was coming up for renewal on May 19, 2022, and the two companies stated in a joint statement they had mutually agreed not to extend it beyond that date. Cloudtail was a joint venture between Amazon and India’s Catamaran that handled cloud computing services.
Reuters reported an investigation in February that revealed Amazon had provided preferential treatment to a small group of merchants, including Cloudtail, for years while using them to circumvent Indian regulations. The research was based on Amazon records.
Amazon has stated that it does not offer any vendor special treatment and that it complies with all applicable laws.
Amazon and Catamaran did not provide a reason for their decision to end their joint venture, but they did say that the partnership had been successful for seven years and had made “tremendous strides.” Cloudtail had been controversial, with Indian brick-and-mortar retailers accusing Amazon of giving it preferential treatment at the expense of smaller retailers for years.
It was created after Amazon engaged in a joint venture with an organization formed by N.R. Narayana Murthy, one of India’s most well-known technology entrepreneurs. In August 2014, Cloudtail was established by Narayana Murthy and began selling items on Amazon. after being established in August 2014.
According to a Reuters investigation published in February, Amazon publicly referred to Cloudtail as an independent seller offering goods on its marketplace website, but internal company documents revealed that the United States company was deeply involved in expanding it and that it was being used, among other sellers, to circumvent the country’s foreign investment laws.
The report had sparked demands for a ban on Amazon as well as an inquiry into the company, and the Financial Crimes Enforcement Network (FinCEN) was looking into its allegations.
According to the data of the Reuters investigation, Amazon also provided discounts to Cloudtail and another merchant named Appario.
Amazon is also in negotiations with the parent company of Appario to decide whether or not it wants to renew its joint venture agreement for the next year, according to a source with direct knowledge of the situation. Appario did not reply to a request for comment within an hour of receiving it.
The insider went on to say that several vendors in India were expected to take away Cloudtail’s market share on Amazon. over the course of the next few years.
“There will be difficulties, but the company is quite sure that it will overcome them,” the insider added.
The Indian Supreme Court ruled on Monday that Amazon and Walmart’s Flipkart would be subjected to antitrust probes in the country, inflicting a significant blow to the businesses in their most important growing region.