Narayana Murthy and Jeff Bezos to end their Cloudtail alliance
16 Aug 2021
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Infosys founder-chairman Narayana Murthy and Amazon’s Jeff Bezos have decide to end their e-commerce joint venture, called Prione, which set up a fully-owned unit Cloudtail that sold goods online alongside independent shops and grew to be one of the largest sellers on Amazon.
Amazon.com Inc decided to exit the controversial joint venture in India in the wake of anti-trust probe into the working of the e-commerce giant that found an unholy nexus between Amazon and select sellers on its e-market platform.
The disbanding of the joint venture comes as a potential setback for the e-commerce giant in a market where the online business is projected to grow to $1 trillion.
Prione Business Services Pvt Ltd will cease operating from mid-2022, the companies announced on Monday. The seven-year-old joint venture, which began by helping merchants get online to sell their wares before becoming a dominant vendor itself, is owned by Amazon and the private investment firm of Narayan Murthy, Catamaran Ventures LLP.
The partners have “mutually decided to not continue their joint venture beyond the end of its current term,” they said in a statement. The JV has enabled over 300,000 sellers and entrepreneurs to go online and enabled 4 million merchants with digital payment capabilities, they said.
Amazon is under scrutiny of the Competition Commission of India over business practices that small retailers contend are unfair and illegal. The CCI started a probe last year into the company and Walmart Inc-owned Flipkart after local retailers alleged the e-commerce platforms are abusing their dominance through deep discounts, exclusive tie-ups and favorable backing of certain vendors.
The Confederation of All India Traders (CAIT), a group which represents millions of small retailers, alleged that the company was circumventing the country’s new e-commerce rules.
The Supreme Court on Monday rejected petitions by Amazon and Flipkart to halt the probe, ruling instead that the antitrust investigation could proceed.
“We expect big giants like Amazon, Flipkart volunteering for inquiry and transparency and you don’t even want it,” Chief Justice N.V. Ramana said in the ruling. “Inquiry has to be permitted.”
For Murthy, continuing the alliance would amount to collaborating with e-commere firms to violate the spirit of India’s e-commerce laws.
Prione was set up in 2014, a year after Amazon began selling in India, with the US retailer owning 49 per cent and Catamaran Ventures holding 51 per cent. The idea was to train and bring on the Amazon platform new-to-online merchants, including local shops like weavers and women-led startups. They were instructed in fundamentals like photographing and cataloging their products, writing accurate descriptions and providing customer assistance.
In February 2019, Amazon reduced its stake in Prione to 24 per cent, while Catamaran Ventures raised its holding to 76 per cent.
Prione set up a fully-owned unit called Cloudtail that sold goods online alongside the independent shops and grew to become one of the largest sellers on Amazon, forging agreements with premium mobile phone brands like Apple and OnePlus. Cloudtail vended over a third of the goods sold on Amazon even as recently as two years ago.
