E-commerce sellers’ lobby ISC urges Narayana Murthy to end partnership with Amazon for Cloudtail India

Last month, the government had proposed amendments to draft Consumer Protection (E-commerce) Rules to ban specific flash sales or back-to-back sales.

Ease of Doing Business for MSMEs: Micro and small e-commerce sellers’ advocacy group Indian Sellers Collective (ISC) on Monday said it has urged Infosys Founder Narayana Murthy through an open letter to end the partnership with Amazon India for Cloudtail. Cloudtail is a joint venture of Narayana Murthy’s family office Catamaran Ventures and Amazon India. ISC said Murthy has been “In cahoots with Amazon through a name-lending arrangement with Cloudtail acting as a front for Amazon’s retail business and defied the objectives of the policies of the Government of India.” Blaming Murthy, the body said that “Just for a fixed fee or returns, he has sacrificed the interests and livelihood of millions of small traders in India and left them at the mercy of Amazon.”

“According to the new e-commerce rules, e-commerce companies running marketplace platforms cannot sell products through companies, and of companies, in which they hold an equity stake. Amazon is circumventing this law by holding a 24 per cent stake in Cloudtail India which indulges in deep discounting and predatory pricing to deceitfully capture the Indian retail market and, in the process, hurting families of millions of retailers in the country whose lives and livelihood depend on their small shops and micro establishments,” Abhay Raj Mishra, President, Public Response Against Helplessness and Action for Redressal (PRAHAR) told Financial Express Online.

PRAHAR is among the members of ISC. Others included Federation of All India distributors Association (FAIDA), All India Consumer Products Distribution Federation (AICPDF), All India Mobile Retailers Association (AIMRA), All India Online Vendor Association (AIOVA), and FMCG Distributors and Traders Association (FDTA).

Amazon didn’t immediately respond to an email seeking comments. An email to Catamaran Ventures was also sent seeking comments from Murthy.

Mishra said Murthy’s Catamaran Ventures indirectly holds the rest 76 per cent shares through Prione Business Services. Though this arrangement between Amazon and Catamaran makes Cloudtail a Catamaran Ventures-owned company that does not flout any regulation on paper, it is just a name-lending arrangement to circumvent the law, and also Cloudtail is ultimately owned and controlled by the mysterious Hober Mallow Trust with Catamaran as the acting trustee, he added.

Moreover, “the fact that the senior leadership of Cloudtail and its holding company, Prione Business Services as well as many of its board members are former Amazon employees raises serious doubts about its intentions,” Mishra said.

A report by Reuters in February this year had noted that Amazon for years gave preferential treatment to a small group of sellers in India, publicly misrepresented its ties with the sellers and also used them to circumvent the foreign investment rules.

Last month, the government had proposed amendments to draft Consumer Protection (E-commerce) Rules to ban specific flash sales or back-to-back sales “which limit customer choice, increase prices and prevents a level playing field.” The draft had also proposed to restrict e-commerce companies from “manipulating search results or search indexes” in order to ensure there is no prevent preferential treatment among sellers.

“Prione Business Services is a joint venture between Catamaran Ventures and Amazon and is the parent company of Cloudtail India. Catamaran Ventures raised its stake in Prione Business Services after the implementation of new e-commerce rules in 2019. The move reduced Amazon Asia’s stake in Cloudtail to 24 percent from the earlier 49 percent, with Catamaran Ventures’ stake rising to 76 percent from 51 percent earlier,” added Mishra.

Amazon along with Walmart’s Flipkart is currently facing a probe by the Competition Commission of India for allegations with respect to preferential seller treatment, deep discounting, etc. However, both companies have repeatedly denied any contravention of Indian laws. Nonetheless, “If an Indian leader like Narayana Murthy stops supporting Amazon with the Cloudtail arrangement, it will open up the world of opportunities for lakhs of sellers,” according to Mishra. Amazon is currently heading into its Prime Day sale event this month and is ramping up its storage infrastructure for the festive season ahead.