World’s richest man, Amazon founder and CEO, Jeff Bezos, is on a three-day visit to India. But the visit is not turning out to be nothing like what the Amazon founder would have imagined. In fact, Bezos’ Amazon is facing a Competition Commission of India (CCI) probe into allegations of competition law violations, along with Walmart’s Flipkart. The move has sent shockwaves up to New York. The New York Times wrote, “instead of garlands, India’s supervision is welcoming him (Bezos) with a new antitrust case”.
Not just legal trouble, Bezos is also facing protests by small traders within India. On Wednesday, a trade union representing 70 million brick and mortar retailers planned protests across 300 cities. According to Praveen Khandelwal, the leader of the Confederation of All India Traders, “Bezos and Amazon have already destroyed many small businesses and are now trying to build a false narrative of empowering small retailers.”
Amazon has drawn fire predominantly on two issues which have led to the anti-trust probe- predatory pricing and preferred sellers. In fact, Amazon has been infamous due to allegations of predatory pricing.
In 2017, Lina Khan, then a law student at Yale, had published “Amazon’s Antitrust Paradox” in a note for the Yale Law Journal, wherein it was concluded that Amazon was guilty of predatory pricing, a practice whereby goods or services are sold at such a low price that other competitors are forced to exit the market.
Khan had stated, “Although Amazon has clocked staggering growth, it generates meagre profits, choosing to price below-cost and expand widely instead.”
In the Indian context, the practice of deep discounting has emerged as a major cause of concern. Amazon is infamous for offering impossibly high rates of discount, sometimes below the cost price, throwing competing retailers out of business, which explains why Jeff Bezos has been greeted with protests by small traders on his India visit. Such predatory pricing allows the predating firm to soon buy out the competitors and then bring back skyrocketing prices.
The policy of “preferred sellers” has also emerged as a murky and suspicious policy. The e-commerce giant is alleged to have violated competition laws by promoting “preferred sellers” on their platforms.
There is no clarity as to the criteria for selecting preferred sellers. Such preferred sellers resort to deep discounting which sometimes borders on predatory pricing. There are also allegations of the “preferred sellers” being affiliated with or substantially controlled by Amazon.
In fact, the CCI order launching an anti-trust probe against Amazon and Flipkart has stated, “Allegedly, there is an existence of various vertical arrangements between Flipkart with their preferred sellers on the platforms; and Amazon with their preferred sellers on the platforms, respectively which leads to a foreclosure of other nonpreferred sellers from the online marketplace.” It has added, “These preferred sellers are also alleged to be affiliated with or controlled by Flipkart/Amazon either directly or indirectly.”
Amidst the boycott that Jeff Bezos is facing owing to the serious allegations against e-commerce giant, Amazon, it has also been reported that Union Minister of Commerce & Industry, Piyush Goyal is unlikely to meet Amazon founder, Bezos. There were speculations that Bezos might meet the Union Minister, Goyal on his India visit. However, sources have now rebutted all claims of a possible visit between the two.
It is relevant to mention here that last year, Goyal had expressed concern about the practice of predatory pricing/ deep discounting pursued by e-commerce giants. He had said, “E-commerce companies have no right to offer discounts or adopt predatory prices. Selling products cheaper and resulting the retail sector to incur losses is not allowed.”
Meanwhile, Jeff Bezos has tried to make up for the severe criticism that Amazon is facing over allegations of predatory pricing and suspicions about “preferred sellers”. He has therefore initiated a major PR exercise. During his ongoing visit, he has promised that the e-commerce major, Amazon will give a push to Modi government’s flagship “Make in India” by exporting its global footprint to export $10 billion worth of ‘Make in India’ goods by 2025. He has also said that the e-commerce major is going to invest $1 billion in digitising small and medium businesses across India.
This is an attempt to fulfil India’s expectations from the e-commerce giants. Amazon has build a massive base in India, and the Modi government wants e-commerce giants like Amazon to engage small retailers a part of their growth story in an attempt to promote “Make in India”.
Clearly as a part of his PR exercise, Amazon founder also visited Raj ghat, Mahatama Gandhi’s memorial in New Delhi on Tuesday and also tweeted a visit of his visit to the memorial.
Just landed in India and spent a beautiful afternoon paying my respects to someone who truly changed the world. “Live as if you were to die tomorrow. Learn as if you were to live forever." – Mahatma Gandhi. pic.twitter.com/xDXAT9cBgf
— Jeff Bezos (@JeffBezos) January 14, 2020
Apart from criticism of Amazon’s policies in India, Jeff Bezos is also facing the ire of the Indian people over Washington Post. Jeff Bezos’ outlet has been anything but kind to India and therefore one can’t help but associate this ministerial snub with the infamous Washington Post which has deployed rabid and often ridiculed critics of the Modi government to source its Op-eds on India.
Washington Post has been pursuing a clear anti-India agenda with scathing and biased op-eds displaying the toxic narrative that it looks to push against India.
Ever since Modi government came to power in 2014, Washington Post has emerged as an anti-India outlet especially with its insidious propaganda about mob lynchings in India. It persisted with such anti-India propaganda even after abrogation of Article 370, in the form of hearsay and fake news about Jammu & Kashmir. Subsequently, after the Ram Mandir verdict, Washington Post continued with its anti-India agenda. It published a story titled, “Hindus rejoice, Muslims deplore India court ruling on temple.” Most recently, the Washington Post published stories that played a big role in spreading fake news and rumours about the Citizenship Amendment Act (CAA) passed by the Indian Parliament.
It is believed that the Washington Post has been employed extensively by Jeff Bezos, Amazon founder, in order to undermine India’s democracy and paint Modi government in a bad light, and perhaps even use this as a bargaining tool to further his business interests in India. However, the world’s largest democracy is a force to reckon with and Jeff Bezos must have come to terms with that fact after facing a major backlash on his three-day India visit.
Having realised that his business strategy and also his political strategy, that is, the ploy of attempting to undermine the world’s largest democracy has failed miserably having invited serious backlash culminating into the royal snub that he faces today on his visit to India, the Amazon founder is now making all possible attempts at placating India, as is illustrated by his move of promising to invest in digitisation of small and medium businesses in India.
While Bezos has initiated a major PR exercise, his commitment towards following a benevolent market strategy in India will still take a while to be tested.