Amazon's top sellers Cloudtail and Appario are suddenly subject to antitrust investigation

On April 28, India’s antitrust regulator conducted surprise inspections on Amazon’s top sellers Cloudtail and Appario , accusing them of violating India’s Competition Act .

Local retailers in India have long argued that Cloudtail and Appario are engaging in predatory pricing on Amazon , harming the interests of other sellers . But the two companies say they comply with all Indian laws and have not violated any rules .

The exact nature of the investigation into the irregularities is unclear and Amazon, which indirectly holds stakes in both companies, did not respond to requests for comment . Neither Cloudtail, Appario nor regulator Competition Commission of India (CCI) responded .

The raids in the capital New Delhi and the southern tech hub of Bengaluru were related to a probe ordered by the CCI in January 2020 , one of the sources said . Amazon and rival Walmart's Flipkart face allegations of anti-competitive practices such as promoting preferred sellers on their sites and prioritizing listings of certain sellers over others.

But the companies have denied the allegations, and the antitrust investigation is ongoing.

Amazon has previously said it does not give preferential treatment to any seller on its platform and treats all sellers in a fair, transparent and non-discriminatory manner.

But an investigation by foreign media based on internal Amazon documents shows that Amazon has been providing preferential treatment to a small number of sellers, including Cloudtail, for many years and using these sellers to circumvent Indian laws. Amazon has been helping these sellers for many years with discounted fees and helping Cloudtail cut special deals with large technology companies.

The survey found that Amazon had more than 400,000 sellers in the Indian market in 2019, of which 35 sellers accounted for two-thirds of its total sales. Among them, the sellers Cloudtail and Appario surveyed accounted for 35% of the sales on the Indian Amazon platform .

The antitrust agency told the court that the foreign media investigation confirmed the evidence it had received against Amazon.

It is understood that both Cloudtail and Appario are joint ventures. In 2014, Amazon and Murthy's Catamaran established Cloudtail, which soon became one of the largest sellers in the Indian market. Appario is a joint venture between Amazon and the Patni Group.

However, Amazon said that it will shut down Cloudtail's business on its platform from May 2022. Before the end of May , all employees of Cloudtail and its parent company Prione Business Services (about 1,200 people) will be transferred to Amazon India for unknown reasons.

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Antitrust investigation