One of India's largest corporate tussles — Amazon vs Future — is coming close to its end
It feels like ages ago when Reliance announced its deal with Future Retail, and in the world of business 16 months is often long enough for it to be called an age. But Amazon threw a spanner in the works.
And now that Amazon’s stake in Future Group has been revoked and suspended after all these months, the deal just doesn’t seem as shiny as it did last August. We’ll look into what happened and how we got here, but before we dive into this, here are two stories to whet your appetite.
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- ?Twitter India Boss Turns Entrepreneur: Manish Maheshwari has launched edtech startup Invact and envisions a VR-based platform called Metaversity
Amazon-Future-Reliance Saga’s Final Hour
One of India’s largest corporate tussles of modern times is coming close to its end. After the CCI suspended Amazon’s 2019 deal with Future Group over a stake purchase in a related entity, the ecommerce giant has faced a major setback in its retail ambitions in India and could face further legal challenges.
Before the CCI decision to suspend that deal, Amazon had strongly opposed the Future-Reliance deal as the US giant claimed it would restrict competition in the Indian retail market by allowing Reliance Retail to grow its presence without many other major rivals.
Big Blow For Amazon: Primarily, the CCI’s ruling allows Reliance to press forward and finalise the acquisition of Future’s retail assets, which has been hanging in the balance since August 2020. Reliance signed a $3.4 Bn deal to purchase Future’s retail and warehouse assets.
Secondly, as per CCI, Amazon had suppressed information while asking for the regulator’s approval when investing in Future Coupons Ltd, which gave it some control over Future Group’s retail assets. While Amazon is likely to appeal against the CCI order and can also reapply for CCI approval, the ruling means that Future Group is unlikely to cooperate in any reapplication process for the antitrust clearance.
The CCI also imposed a penalty of around $27 Mn on Amazon India for its misrepresentation.
The Background: The legal entanglement began when Amazon sent a legal notice to Future Group soon after the Reliance deal was announced. Then, in October 2020, Amazon approached the Singapore International Arbitration Centre (SIAC) for an alternative dispute resolution process. Amazon claimed Future Group had violated the contract under which Amazon had purchased the shares of Future Coupons in 2019.
Since then multiple court cases and SIAC directives later, there has been no clear resolution until the CCI’s decision this week.
Future Retail, which saw business plummet in the immediate aftermath of the pandemic in March last year, still has significant retail presence, which makes it a prized asset for Reliance as well as Amazon for their omnichannel retail ambitions. Future Retail owns more than 1,500 supermarkets and other outlets.
Why Was Amazon Pulled Up: The CCI slapped a fine on Amazon for making contradictory statements before different legal forums and the regulator about the intent of the 2019 transaction and then put the Future Coupons deal in abeyance.
Over the past 18 months, Amazon has faced stiff opposition and pressure from traders’ groups and landed itself in many controversies. For instance, internal documents showed that the US giant deliberately copied and outpriced Indian D2C products that sold well on its platform. Other reports also highlighted how Amazon had shown bias towards sellers that it owned an indirect stake in.
And while this is certainly a big setback for Amazon, there’s little doubt that the tech giant will look at a different strategy for its retail plans, even if the Future Group has slipped away. What that would be will be interesting to see in 2022.
Tracking Startup IPOs & Tech Stocks ?
- ?RateGain’s Weak Start: RateGain got listed at a discount of 15.29% on Dec 17 and further fell nearly 20% from its issue price at closing
- ?MapMyIndia Expects Hot Debut: MapmyIndia issue was subscribed 154.71 times and as per grey market premiums, it may yield 2x returns for investors.
- ?BYJU’s Gears Up For IPO: BYJU’s plans to raise $4 Bn at a valuation of $48 Bn through a merger with a special-purpose acquisition company and is on the lookout for the right partner.
- ? Freshworks Market Cap Crashes: Freshworks’ valuation has slipped to $7.1 Bn from its stellar NASDAQ $10 Bn IPO debut
Here’s the weekly performance of listed tech companies we are tracking:
Indian Startup Funding Counter
Flipkart backed Ninjacart, Innovacer raised $150 Mn and ShareChat’s valuation soared to $3.2 Bn with a $266 Mn Series G round — Overall, the Indian startup ecosystem raised $1.3 Bn in funding across 48 deals in the past week.
In Spotlight | 2021 In Review
Recap the most incredible stories of the year with our annual tech and startup review. The eighth edition of this series introduces our app analysis series, starting with music streaming and OTT video streaming platforms, with more to come.
Plus, we have also gone over the funding boom this year, the NFT craze and the IPO frenzy this year. Watch out for more all through this month.
Keep track here!
Finally, here’s a look at the other major stories and developments from the week that went by:
- Addressing The Funding Bubble Fears: In this week’s edition of The Outline, as we continue to dive into the major trends of 2021, we asked investors if the funding boom this year is a precursor to a big bubble?
- ? Flipkart’s Big Grocery Play: Flipkart has launched 600+ grocery-related SKUs on Shopsy, claiming to reach 700 cities in India
- ?️Grofers Is Now BlinkIt: In a move to bring more focus on its 10-minute delivery capability, Grofers has renamed itself and received a fresh coat of paint.
- ⚖️ Gaming, Gig Economy Regulations: Karnataka govt’s ban on online gaming has irked the state’s chess ecosystem, meanwhile, SC has demanded that the centre look into recognising gig workers’ right to social security.
- Crypto’s Endless Wait: With speculation of the crypto bill getting delayed again, here’s a not-so-rosy picture of the ecosystem.
- ? D2C Brands Want Your Subscription: New-age D2C brands want a big piece of the subscription economy and new models are emerging across categories.
That’s all for this week, folks. Watch out for a more data-packed newsletter every Sunday as we recap the week’s biggest stories and developments.