In 2021, there was never a dull day, as companies never leave a chance to take a dig at their competitors, troublemakers, and the likes
From Amazon-Future case in its last leg to OYO’s five-year-old brawl with Zostel, we have jotted down the top seven spats that went ugly in 2021
The fights between startups and bigger companies were also headturners in certain sectors such as the gig economy, ecommerce, and IPs, changing the foundation of decision-making for startups
Every year, there are certain hits and misses and within the corporate sector, companies never leave a chance to take a dig at their competitors, troublemakers, and the likes. Naturally, 2021 was no exception. And as a part of our 2021 In Review series, we are back with yet another annual story collating and highlighting the fights which went ugly this year.
Before we dive in, here’s a look at the stories that were trending last year, and those that left their marks this year too. While last year was replete with Amazon’s long-standing bet against Reliance acquiring Future Retail, and CAIT’s repeated dig at Amazon, it carried well into this year too, with a final verdict that may soon arrive.
In the case of the retail tech industry, two founder-friends had turned foes over the ownership of the Dukaan app; while the industry witnessed a battle over the term “Basket” between Tata-owned BigBasket and a remotely known Daily Basket (also, trademark infringement suits were a hot deal this year!).
In the hottest-of-all fintech sector, the wordplay of pay as ‘pe’ hit payment giants PhonePe and BharatPe even in 2021. OYO’s IPO has been lowballed with a number of lawsuits from several stakeholders, including the one with Zostel.
Without further ado, let’s get to the list of disputes that went ugly in 2021.
Amazon Vs Future (& Reliance): A Battle Of Power In Indian Retail Ecosystem
Two of the world’s richest men (Amazon’s Jeff Bezos and Reliance’s Mukesh Ambani) have locked horns in a battle over the reportedly sinking ship that is Future Retail. The altercations between Amazon and Future began in August 2020 when Kishore Biyani-led Future Group signed an MoU with Reliance Retail for the sale of its consumer retail arm for INR 24,713 Cr, citing bankruptcy.
In September 2019, Amazon acquired 49% stakes in Future Coupons, a Future Group subsidiary, that owns 7.3% shares in Future Retail. While CCI prevents FDI in the Indian retail ecosystem, Amazon is said to have routed its investment in Future Retail through twin entity investment, eventually acquiring 3.58% of the biz. The ecom giant’s deal further mentioned a list of 30 entities with whom the Future Coupons could not transact, including Reliance Retail.
The restraint was on Future Coupons, but it eventually applied to Future Retail — the business set to be acquired by Reliance Retail.
Following the deal announcement between Future Retail and Reliance Retail, Amazon initiated arbitration proceedings at the Singapore International Arbitration Centre (SIAC), seeking to block the deal. While the fight began in late 2020, it only took a heated turn in January 2021.
Escalating the matter from the SIAC to Delhi HC, now, a decision by the Supreme Court is pending over a petition filed by the US-based ecommerce major. While Future Group’s side of arguments points towards Amazon’s malicious intentions in investing in Future Coupons, a deal which stands temporarily suspended now, misleading the Indian antitrust watchdog and bankruptcy claims, Amazon has cited a monopolistic tendency on Reliance’s part, which upheavals Amazon’s presence in one of the world’s largest ecommerce markets.
Traders’ Body CAIT Vs Amazon India: Why Should Ecommerce Have All The Market
Ecommerce giants have a very strained relationship with sellers in India. Besides, the fight between the Confederation of All India Traders (CAIT) and ecommerce behemoths Amazon India and Walmart-owned Flipkart is long-standing.
But this year, as the effects of the pandemic subsided, CAIT made its apprehensions abundant by calling Amazon (and Flipkart) the ‘new edition of East India Company’. On numerous occasions, the trader’s body has written to the CCI, demanding immediate steps for an aggressive investigation into Amazon’s business models about:
- Complaints of dominance and non-competitive business practices
- The adverse effect of foreign ecommerce companies on the country’s economy and retail market
- Practices such as deep discounting, preferential treatment of some traders and more.
It had also launched a 30-day campaign in September 2021, against Amazon and the likes, in favour of the new ecommerce rules.
Most recently, CAIT petitioned against Amazon’s practices for selling marijuana through Amazon India’s platform. It indicated that the US-based ecommerce giant was foul playing by rigging bureaucracy. CAIT has also strongly voiced its opinion on the Amazon-Future scuffle, stating that Amazon is a ‘perpetual offender of Indian laws’. Recently, it also stated that Amazon has made a mockery of the competition act, during its statements for the spat between Amazon and Future.
Before that, the traders’ body called for a CBI probe against the ecommerce giant after a report accused it of copying best-selling products from Indian brands, to boost its private-label play. Amazon was also accused of rigging search results to give more visibility to its brands over rivals. CAIT was also reportedly launching a homegrown hyperlocal-focussed ecommerce app to compete with Amazon, after calling for its ban, and subsequently demanding an ecommerce regulator.
BigBasket Vs Daily Basket: The Conundrum Over “Basket”
The early months for the team — January & February — at BigBasket were especially busy, thanks to Tata Group acquiring the online grocery unicorn at a valuation of $2 Bn. Yet, it did not stop the startup from filing a trademark infringement case against a small, unknown, Coimbatore-based startup Daily Basket over the term “Basket”.
BigBasket filed a cease and desist order against Daily Basket in February 2021, claiming that the latter copied its logo, app and website layout (a glance showed that it didn’t). It added that the term “Basket” was so intrinsic to BigBasket, that Daily Basket was banking on the startup’s brand recognition. Further, it also demanded INR 2 Lakh in legal compensation.
Within days of receiving the notice, Daily Basket cofounder Ramesh Vel launched a new website called bbisabully.com, an online campaign #BoycottBigBasket and #BigBasketIsABully on Twitter. Daily Basket received prompt sympathies and support from netizens in the case, terming Big Basket’s actions as “corporate bullying”.
Netizens alleged that if the use of “Basket” is held as trademark infringement, then several small businesses such as Wow Basket, Smart Basket, Med Basket, Fresh-o-Basket, Pure Basket, and Godrej’s Nature’s Basket, among several others, should also come under Big Basket’s radar.
PhonePe Vs BharatPe: The Battle Over ‘Pe’
Walmart-owned PhonePe currently owns the largest UPI-base in India, transacting over 40% of the $100 Bn+ worth of monthly transactions. BharatPe, on the other hand, is one of the leading names in enabling QR code services for merchants that use UPI platforms (PhonePe’s merchants are potential customers). Despite the differences, the word ‘Pe’ in their respective names, has had them making back and forth trips to the judiciary system.
The scuffle between the two fintech companies over the name has been going on since 2018. PhonePe first raised the issue in August 2018. It sent a legal notice to BharatPe seeking the removal of the suffix in question. While BharatPe didn’t remove ‘Pe’, it certainly changed its logo and colour scheme.
In May 2019, PhonePe took BharatPe to Delhi High Court, claiming trademark rights over the usage of the suffix. It demanded an injunction order against BharatPe from using the name. However, the court refused to grant the requests. In April 2021, PhonePe filed a motion challenging the order, which it withdrew in June 2021; it did not withdraw the suit against BharatPe, though.
In October, PhonePe approached the Bombay High Court to restrain BharatPe from ‘misusing’ PhonePe’s registered trademarks by using and promoting the marks ‘PostPe’ / ‘postpe’. That prompted BharatPe to move to Delhi HC court, claiming that the registrations obtained by PhonePe are illegal and thus cancel six of the latter’s ‘Pe’ trademarks. This was rejected by the court, and the battle continues.
OYO Vs Zostel: A Deal That Never Was
The longstanding fight between hospitality firms OYO and Zostel has heated up as the former filed its DRHP for an INR 8,430 Cr IPO. In 2016, OYO had signed a term sheet to acquire the assets of ZO Rooms. However, after a long delay, OYO called off the deal. In February 2017, OYO filed a criminal case against ZO Rooms, alleging continuous inconvenience and harassment by its founders.
Zostel, ZO’s parent company, demanded 7% of OYO’s parent Oravel Stay’s shares and a $1 Mn relief claim. It alleged that OYO acquired its data under the pretext of accelerating the process of acquisition and then refused to pay the dues for the business acquired. The enmity could’ve been less bitter. But in March 2021, the tribunal made a ruling — the term sheet between the two was binding, and Zostel could take steps for specific performance. A difference in understanding between the two resulted in one of India’s longest startup spats.
Later, as OYO filed its DRHP with the markets regulator, Zostel and OYO have on numerous occasions written to SEBI, clarifying their positions in the case.
While Zostel stated that OYO’s shareholding was not yet frozen because ZO Rooms awaited its 7% share, OYO stated that lack of definitive agreement meant no case in favour of Zostel. Previously, Zostel also wrote to the Delhi High Court, seeking a pause on OYO’s IPO plans.
OYO Vs FHRAI: Another Attempt To Halt The IPO
Post announcing its IPO plans, OYO, one of the companies knee-deep in controversies, not just faced interruption from Zostel, but also faced allegations from the hoteliers’ body. The Federation of Hotel & Restaurant Associations of India (FHRAI) also wrote to SEBI seeking suspension of the IPO over alleged fraudulent and unfair business practices of the company.
It stated that OYO was still under CCI radar, it has 15 lawsuits (14 against OYO) involving the company, 16 against its directors and 34 involving Oravel’s subsidiaries. Further, OYO has stated that most of the cases are not quantifiable, which also did not sit well with the hoteliers’ body.
Urban Company Vs Partners-Workers: Changing The Game (And Commissions)
One of India’s well known online gigs marketplace Urban Company recently mired in controversy when several of its partners such as beauticians, repair workers (not employees) staged protests outside its headquarter on its policies and poor pay.
On October 8, 100+ women working with Urban Company as beauticians went on strike against the company in front of its Delhi NCR-based headquarter. They alleged low wages, charging commissions as high as 35%, poor working conditions and monopolistic work and product buying codes. When asked by Inc42, one of the protesters also cited heavy penalties and temporary blocks on poor ratings, demeaning rating parameters, among others.
Meanwhile, the Indian Federation of App-based Transport Workers (IFAT) declared its solidarity with the protestors and filed a PIL in the Supreme Court seeking that the gig workforce should be given social security, or it will lead to exploitation of the unorganised workforce, like the case in point.
Almost 10 days after the protest, Urban Company CEO and cofounder Abhiraj Bhal, took to the media to address that he was ‘taken aback’ by the protests. Simultaneously, the company also jotted down 12 points it would undertake to ensure better transparency, working conditions and upskilling of partners. These included cutting down the commission rates from 35% to 20%, removal of temporary blocks, increasing prices for customers to help partners take back home better earnings, among others.
Scaler Vs upGrad: Never A Dearth Of Trademark Infringements Issues
In this story alone we have covered two of the ugliest trademark infringement cases, and as the year rounds up, another one hit the news. Edtech unicorn upGrad filed a suit for trademark infringement against Scaler in Delhi High Court. It had alleged that the latter used its brand name ‘upGrad’ through Google Ads. upGrad stated that Scaler used the keyword ‘upGrad’ to appear on top of search results on Google search engine, in turn gaining illicit benefit.
Thus, the edtech unicorn sought damages of over INR 3 Cr from Scaler. Not just Scaler, upGrad is also mulling to file trademark infringement suits against other edtech companies indulging in similar AdWord bidding activities.
While Scaler has categorically denied the allegations, calling itself an ethical company, the court, until further notice, has directed Scaler not to bid on upGrad’s registered marks and or its variants using Google Ads Programs or any other keyword program.
Summing Up The “Not-A-Boring-Day” 2021!
Over the last few years, the Indian startup ecosystem has seen the rise as well as the untimely fall of hundreds of promising startups. The ecosystem also witnessed the reputations of startups and their stakeholders being shattered into dust, and antagonism between startups resulting in major legal battles.
From ugly courtroom battles to fancy banters on Twitter, there was not a single uneventful day in the Indian tech ecosystem in 2021. From the above detailed Amazon-Future spat or the undertone playful but witty remark by Bajaj Auto’s Rajiv Bajaj that champions (established automobile players) eat OATS (Ola, Aether, Tork, SmartE) for breakfast; Tesla’s back and forth spat with the government on the former’s entry, along with the lines ‘no, you first’, or social media giants lobbying against the new IT Rules, the ecosystem saw it all.
These were some of the biggest spats that undertook within the Indian startup ecosystem this year. And we have many more interesting stories in store for our 2021 In Review Series, so stay tuned!