Amazon and its top seller Cloudtail to end ties amid allegations of giving preferential treatment

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Amazon and its top seller Cloudtail to end ties amid allegations of giving preferential treatment
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  • Amazon and its top Indian seller Cloudtail will reportedly not renew their contract ending on May 19, 2022.
  • This comes amid allegations from retailers at Amazon of Cloudtail India receiving preferential treatment from the e-commerce giant.
  • In February, an investigation by a media report on Amazon said that it gave preferential treatment to a small group of sellers including Cloudtail and used them to bypass Indian laws.
US-based e-commerce titan Amazon and one of its biggest sellers in India, Cloudtail India, are reportedly going to end ties and not renew their contract after May 19, 2022 after seven years of partnership.

Cloudtail India came into existence when Amazon and Indian billionaire and cofounder of Infosys, N.R. Narayana Murthy, formed a joint venture called Prione Business Services in August 2014.

This comes when Amazon has been under speculation for giving preferential treatment towards sellers that it had a stake in – Cloudtail and Appario. However, the company had in the past lashed out, calling the report “unsubstantiated, incomplete, factually incorrect”.

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The Competition Commission of India (CCI) had also ordered investigation into Amazon and Walmart-owned Flipkart last year for allegedly promoting select sellers (those in which they own a stake) on their e-commerce platforms and using business practices that stifle competition.

Cloudtail has a strong presence in the Amazon India marketplace in categories like smartphones, electronics and fashion.

India’s laws in foreign direct investment (FDI) in retail restrict companies like Amazon to sell items directly to consumers and hence allegedly to bypass these laws they operate through joint ventures with local companies.

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Business Insider has reached out to Amazon India for comments. We will be updating the story if and when we receive a response.

A Reuters investigation in February had said that Amazon publicly called Cloudtail an independent seller offering goods on its marketplace website, but internal company documents revealed the US company was deeply involved in expanding it and used it, among other sellers, to circumvent the country's foreign investment laws.

The media report showed that Amazon also gave Cloudtail, and another seller named Appario, discounted fees.

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Reportedly, Amazon is also in talks with the parent of Appario to determine whether it wants to renew its joint venture next year.

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