By Michelle Jones. Originally published at ValueWalk.
Amazon reportedly used a secret strategy to dodge Indian regulators. Citing internal documents, Reuters reports that the company was biased toward large sellers on its Indian platform and used them to bypass regulators’ rules. Those rules were supposed to keep smaller sellers from being crushed by online retailers.
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Amazon accused of dodging Indian regulators
According to Reuters, Amazon executive Jay Carney was preparing for a key meeting in early 2019. He was set to speak with the Indian ambassador to the U.S. In Delhi, Indian officials had just announced regulations for foreign direct investments, which could have disrupted Amazon’s sales in the second most populous nation in the world.
Before Carney’s meeting, Amazon workers prepared instructions for him on what to say and not say. They told Carney to emphasize the company’s $5.5 billion investment in India. They also told him to explain how Amazon provided an e-commerce platform for more than 400,000 retailers in India.
However, Amazon management told him not to reveal that about one-third of the value of all the goods sold on the platform came from about 33 sellers. The instructions stated that this detail was “sensitive/ not for disclosure.”
Sensitive details on Amazon
According to Reuters, other Amazon documents reveal further details that could draw the scrutiny of Indian regulators. For example, two other sellers on the company’s platform in India accounted for about 35% of its sales in early 2019. Additionally, Amazon had indirect equity stakes in those two sellers. That meant about 35 of the over 400,000 Indian sellers on the company’s platform accounted for approximately two-thirds of its sales.
If these details were released, they would provide proof for small Indian retailers that have alleged that Amazon hurts their businesses. These sellers accuse the online retailer of ignoring federal laws and showing bias toward a handful of big sellers. Thousands of small retailers back Prime Minister Narendra Modi, so the information could have drawn his ire. It also would have undercut Amazon’s public message that it is friendly toward small businesses in India.
Reuters adds that it’s unclear what Carney ended up telling the Indian ambassador during their meeting in April 2019. Neither side would provide a comment on the specifics.
Amazon is part of the Entrepreneur Index, which tracks 60 publicly traded companies still managed by their founders. Founder Jeff Bezos is still serving as CEO, although he is scheduled to step down from the CEO position and become the company’s executive chairman. The transition is set for the second half of this year.
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