Investigation into Amazon’s documents has revealed the Silicon Valley tech giant used various ‘strategies’ to dodge India’s regulators, going as far as “pushing the boundaries,” Reuters reported.
The documents reviewed by Reuters are for the period between 2012 and 2019 and include business reports, draft meeting notes, emails, and PowerPoint slides.
This is a big news drop given that Amazon has committed to invest $5.5 billion in India and comes amidst long standing allegation from small, local Indian traders that the tech giant was playing favourites on its platform, indulging in predatory pricing and “crushing retailers”.
The development has also emerged on the heels of multiple legal tangles the company is facing with regulators such as the Competition Commission of India (CCI), the Enforcement Directorate (ED), and the Supreme Court of India (SC).
Here is all you need to know from the investigation:
>> In early 2019, senior Amazon.com executive Jay Carney met the former press secretary to the then United States President Barack Obama in the backdrop of the Indian government’s new Foreign Direct Investment (FDI) rules.
>> Notes prepared for Carney, and accessed by Reuters, showed that he was directed to talk about Amazon’s promised $5.5 billion investment in the country and over 400,000 sellers its India platform hosts.
>> He was, however, also directed to neglect mentioning that only 33 of these sellers accounted for a third of all goods sold on the site – the information was tagged ‘sensitive/not for disclosure.’
>> Other company documents further revealed that another two sellers – in which Amazon held indirect equity stakes – accounted for 35 percent of the platforms sales revenue in 2019.
>> In total, these 35 sellers accounted for two-thirds of Amazon India’s online sales that year – against 400,000 the platform hosted. The company said it now has 700,000 sellers.
>> The report notes that small Indian sellers have long alleged that Amazon has “harmed their business” and “favours large sellers”, further noting that these “millions of small sellers” constitute a big base of Indian Prime Minister Narendra Modi’s voters.
>> “Hundreds of internal documents” unearthed by Reuters show that Amazon “for years” gave a select few “preferential treatment” besides “publicly misrepresenting its ties with sellers and used them to circumnavigate tough regulatory restrictions” in India.
>> The favoured sellers, documents show received discounted fees and special deals with other big tech companies such as Apple.
>> Amazon said in its statement that it facilitates “the introduction of brands to sellers” in accordance with the brands’ requirements.
>> A spokesperson for Cloudtail and Murthy said they had no comment. Apple and OnePlus didn’t respond to questions. Microsoft had no comment.
>> Documents also showed Amazon "exercised significant control over inventories of its biggest sellers" – though its public policy states that all sellers operate independently.
>> The vast array of documents also showed the company’s “frank appraisal” of Indian PM Modi – calling his thinking style “straight forward,” and deeming him as “not an intellectual.”
>> The appraisal read as follows: “PM Modi is not an intellectual or an academic but believes that strong administration and governance is the key to running a successful government. He is known to like simple, logical, straight forward thinking without excessive academic jargon.”
>> Amazon on its part re-iterated its commitment to “the prime minister’s vision for India’s digital economy.”
Meanwhile, in its response to Reuters, Amazon stated it “does not give preferential treatment to any seller on its marketplace and has always complied with the law.” It further said that all sellers are treated in a “fair, transparent, and non-discriminatory manner, with each seller responsible for independently determining prices and managing their inventory.”
The company also called Reuters’ report “unsubstantiated, incomplete, incorrect and likely supplied maliciously with intention of creating sensation and discrediting Amazon.”
The Prime Minister’s Office (PMO) and Ministry of Commerce and Industry in India did not respond to queries, as per the report.
Amazon is among the top two e-commerce platforms in India. It made around $10 billion in sales in India in 2019, as per Forrester Research report. As per this report, e-commerce accounts for 4 percent of India’s roughly $900 billion retail market.
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