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Business News/ Companies / News/  Amazon used secret ways to flout rules
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Amazon used secret ways to flout rules

The firm adjusted its corp structure each time govt imposed new rules

Indian traders have alleged for long that Amazon engages in predatory pricing. (Photo: Reuters)Premium
Indian traders have alleged for long that Amazon engages in predatory pricing. (Photo: Reuters)

Amazon has for years given preferential treatment to a small group of sellers on its India platform, publicly misrepresented its ties with the sellers and used them to circumvent tough foreign investment rules that affect e-commerce, internal company documents reviewed by Reuters show.

The documents, dated between 2012 and 2019, are reported here for the first time. They provide an inside look at the cat-and-mouse game Amazon has played with India’s government, adjusting its corporate structures each time the government imposed new restrictions.

With Amazon facing scrutiny by Indian regulators, news of the strategy detailed in the documents could deepen the risks for the company in one of its key growth markets. Indian traders, who are a crucial part of the Centre’s support base, have long alleged that Amazon’s platform benefits a few big sellers and that the company engages in predatory pricing that harms their businesses.

In a written statement, Amazon said that it “has always complied with the law" in India and that “as government policies have continued to evolve, we have consistently made the necessary changes to ensure compliance at all times."

Amazon also said it “does not give preferential treatment to any seller on its marketplace," and that it “treats all sellers in a fair, transparent, and non-discriminatory manner, with each seller responsible for independently determining prices and managing their inventory."

The documents reveal that the e-commerce giant helped a small number of sellers prosper and gave them discounted fees, using them to bypass India’s regulatory restrictions on foreign investment aimed at protecting small traders.

Some 33 Amazon sellers accounted for about a third of the value of all goods sold on the company’s website in early 2019. Another two big sellers – merchants in which Amazon had indirect stakes– accounted for around 35% of the platform’s revenue in early 2019. That meant 35 of Amazon’s over 400,000 sellers in India at the time accounted for around two-thirds of its online sales.

Amazon exercised significant control over the inventory of some of the biggest sellers on Amazon.in, even though it says publicly that all sellers operate independently on its platform.

The e-commerce giant helped Cloudtail, a seller in which it has an indirect equity stake, cut special deals with big tech manufacturers such as Apple Inc, the documents show. One document contains a frank appraisal of Prime Minister Narendra Modi. “PM Modi is not an intellectual or an academic but believes that strong administration and governance is the key to running a successful government," it said.

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Published: 17 Feb 2021, 11:48 PM IST
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