Narayana Murthy owns a majority share of 76% in Cloudtail
Amid the current controversy regarding Amazon, the Confederation of All India Traders (CAIT) on Friday in a letter sent to Union Commerce Minister Piyush Goyal has raised fingers towards Cloudtail, a company of Infosys promoter Narayan Murthy and said that it is not only Amazon but its joint ventures in India are also hand in glove with Amazon who is knowingly helping it to circumvent the law and violate the policy & the rules. The CAIT has also said that several banks prominently among them HDFC Bank, State Bank of India, ICICI Bank, Citi Bank, Kotak Mahindra Bank, HSBC, Bank of Baroda, RBL Bank, Axis Bank, etc., are also colluding with Amazon giving a shopping advantage to people for purchasing goods exclusively from Amazon and other e-commerce companies by giving offers like cashback only on Amazon like platforms but not to people who shop from offline shops.
In its letter to Goyal, CAIT National President B C Bhartia & Secretary General Praveen Khandelwal said that Cloudtail India (P) Limited, a company owned by well-known Industrialist Mr Narayan Murthy and only a few other companies like Appario, Darshita Etel-Darshita Mobiles, STPL-Green Mobiles and Rocket Kommerce, etc., which at the instance of Amazon together control almost 80% of business on Amazon marketplace. Although the policy of the Government specifically provided that though the marketplace (Amazon) should have no relation or control over the retailer (Cloudtail). However, on the contrary, these retail companies are fully controlled by Amazon and the marketplace is a myth created by Amazon. On the Amazon e-commerce site, all orders go to Amazon which decides to which seller, the order is forwarded for delivery and naturally being the joint venture of Amazon, it always gives preference to the sellers who are either an indirect or direct control of the Amazon.
CAIT leaders Bhartia and Khandelwal said that this structure duly reflects the intentions of Amazon and its major companies registered as sellers on its platform.
In Cloudtail and its holding company, Prione Business Services, Managing Directors, CFOs, senior employees are all former employees of Amazon which in itself reveals the clandestine manner of operations on Amazon. Even the majority of board members of Cloudtail are former employees of Amazon. It is astonishing that a seasoned businessman of the stature of N R Narayana Murthy owns a majority share of 76% in Cloudtail, through Prione but the company Cloudtail is driven by former employees of Amazon. We have reason to believe that Narayana Murthy, being one of the top corporates of the country is fully conversant with the operations of Cloudtail, much against the provisions of Press Note No.2 of the FDI policy and yet there is no dissent from Narayan Murthy. It amply ratifies the collusion between Narayan Murthy and Amazon for continuing its mal-practices and unethical business operations in India. It is to be noteworthy that Mr Narayana Murthy owns 76% of Prione. Prione owns 100% of Cloudtail yet the board of directors have Amazon in the majority but the company is control, manage and operates Cloudtail and Prione by persons who were formerly employed with Amazon.
In Cloudtail and its holding company, Prione Business Services, Managing Directors, CFOs, senior employees are all former employees of Amazon. Even the majority of Board Members of Cloudtail are former employees of Amazon. The Board of Directors of Prione include Amit Agarwal, Amazon, Sandeep Varaganti, MD, former Amazon employee, Rajesh Jindal, MD, former Amazon employee, Komal Patwari, Prione legal counsel, Amit Ranade, Catamaran, Nithyanandan R (former Infosys Global Counsel), Catamaran, Arjun Narayanswamy, Catamaran, Sheetal Bhat, Catamaran whereas the Board of Directors of Cloudtail include Rajesh Jindal, MD, Prione former Amazon employee, Komal Patwari, Prione legal counsel Sumit Sahay, MD, Cloudtail, former Director of Category Leadership, Amazon Amit Ranade, Catamaran Nithyanandan R (former Infosys Global Counsel), Catamaran.
CAIT leaders Bhartia and Khandelwal said that this structure duly reflects the intentions of Amazon and its major companies registered as sellers on its platform. Narayana Murthy allowed control of former employees of Amazon from the driving seat of both Cloudtail and Prione which might be due to the fact that this arrangement has been made to the knowledge of Narayan Murthy under some financial contributions and some way or other, he also becomes a wilful and well-known partner. Therefore, the role of Narayan Murthy is also under several questions because he pretty well knows what Amazon is doing on its platform by violating the law and remains a partner of Amazon for providing his company to become preferential sellers. And therefore, he can’t escape from his responsibility.
Bhartia & Khandelwal also raised serious objections towards various schemes of the different banks for giving 10% discount/ cashback on a regular basis for the purchase of any product from the portal of e-commerce companies Amazon & Flipkart. These banks HDFC Bank, State Bank of India, ICICI Bank, Citi Bank, Kotak Mahindra Bank, HSBC, Bank of Baroda, RBL Bank, Axis Bank etc. The above-noted banks are providing these cash discounts exclusively only on the purchase of goods from e-commerce by making payment through their Debit/ Credit cards but if the same goods are purchased from offline shops, this discount is not provided to the customers by any bank. This act of the banks clearly discriminates between two sets of traders thus violating the preamble of the Constitution of India which guarantees “Equality” and restricts the consumers to purchase goods from offline shops which violate Article 19 and Article 301 which guarantees Freedom of Trade and Commerce in the country.
The CAIT leaders said that providing cashback exclusively to online shoppers through the portal of Amazon & Flipkart assumes the status of a cartel which leads to providing help to Amazon & Flipkart for indulging in mal-practices of maintaining predatory pricing, exclusivity and creation of an uneven level playing field in the market which is specifically restricted under Press Note No.2 of the FDI policy. It is a cartel between Amazon & Flipkart with banks which also encourages unfair competition in the market which is prohibited under Section 3(1) read with Section 3(3) of the Competition Act. Section 2 of the Competition Act among other things prohibits agreements that cause or are likely to cause an appreciable adverse effect on competition in India.