Internal documents has exposed how Amazon deployed a secret strategy to bypass Indian laws by frequently changing its corporate structure and killing small businesses by illegally favoring a handful of companies it had stakes in.
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Amazon is being investigated in the US for crushing Startups by investing in them to steal their proprietary information and business ideas for launching competitors.
It is also reported that Amazon is recruiting 26 former FBI agents in order to provide security from and smash the workers unions.
Similar dubious mafia-style business tactics are also employed by Amazon in India.
According to the documents reviewed by Reuters, the tech giant Amazon has favored a small group of sellers operating on the Indian platform.
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This preferential treatment resulted in the public misrepresentation of its ties with the sellers.
Furthermore, the tech giant used the ties to circumvent the tough foreign investment rules imposed by the Indian government affecting the e-commerce sector.
Reviewing the internal documents from 2012 to 2019 has revealed the cat-mouse game played by Amazon with the government of India.
The report seeing light for the first time sheds light on the corporate structure adjustments made by the tech giant every time the Indian government imposed new restrictions to safeguard the interests of the small traders.
This internal report holds significance due to the rising scrutiny faced by Amazon in the Indian market.
The detailed document derails the growth of the company in the key market.
Indian traders allege misconduct by Amazon by favoring a few big sellers.
They also accuse the e-commerce giant of predatory pricing guidelines, which have adversely affected their business.
The findings from the special report support the allegations.
It mentions the following:
- According to the documents, the American e-commerce giants have bypassed the Indian regulatory restrictions on foreign investment by giving a small number of sellers a discounted fee and helped their growth.
- The documents indicate that only thirty-three sellers account for about one-third of the total value of goods sold on the Amazon platform in the year 2019. Among them, Amazon has indirect equity stakes in two big sellers.
- While Amazon states publicly that sellers always operate independently on the platform, the documents suggest the tech giant exercised control over the inventory of certain biggest sellers.
- The document also points to the favoritism shown by Amazon to sellers like Cloudtail in which the e-commerce giant has indirect equity by cutting special deals with manufacturers like Apple Inc.
Amazon, in its written statement, has countered the allegation saying it has always abided by Indian laws.
The company has also suggested its change in guidelines to comply with the continued evolving of the government policies.
The e-commerce giant also squashed the accusation of preferential treatment to sellers on its platform.
Jeff Bezos, Amazon founder, during his visit to India in 2020 announced his plans to spend one billion USD to help small business come online.
Everyone has to wait and see how the report will affect Amazon’s business in India.
With a committed investment of nearly USD 6.5 million and estimated sales of close to 10 billion USD, India is a big marketplace for the e-commerce giant.
Even, the Naukri.com founder Sanjeev Bikchandani echoed the same sentiments recently warning how foreign funds are the new East India Company that are colonising successful startups in India by transferring ownership overseas to skip Indian regulations and taxes.