Amazon.com Inc. is breaking up a controversial joint venture in India with billionaire Narayana Murthy, a potential setback for the e-commerce giant as the country online market is projected to grow to $ 1 trillion.
The seven year old joint venture called Prione Business Services Pvt. will cease operations from mid-2022, the companies announced on Monday. The company, which initially helped merchants sell their wares online before becoming a dominant vendor itself, is owned by Jeff Bezos’ Seattle-based giant and Catamaran Ventures LLP, the private investment firm of the co-founder of Infosys Ltd. Murthy.
The partners have “mutually agreed not to continue their joint venture beyond the end of the current term,” said a statement. The JV has enabled over 300,000 sellers and entrepreneurs to go online and enabled 4 million merchants to use digital payments, they said.
Amazon has come under fire in India for business practices that small retailers contend are unfair and illegal. The Competition Commission of India started a probe last year into the company and Walmart Inc.-owned Flipkart after local retailers alleged the giants abused their dominance through deep discounts, exclusive tie-ups and favourable backing of certain vendors. On Monday, India’s Supreme Court rejected petitions by Amazon and Flipkart to halt the probe, ruling on Monday that the antitrust investigation could proceed.
That adds to mounting pressures on Amazon and Murthy, who turns 75 later this month, to end their collaboration, which has been criticized for violating the spirit of India’s e-commerce laws.
“Mr. Murthy has been in cahoots with Amazon through a name loan agreement with Cloudtail acting as a front for Amazon’s retail business and challenged the policy goals of the Government of India,” the Collective wrote. “Just for a flat fee or returns, Mr. Murthy has sacrificed the interests and livelihoods of millions of small merchants in India and left them at the mercy of Amazon.”
The deadline for a similar Amazon joint venture with Pune’s Patni Group also ends in May 2022, but no decision has been made on its continuity.