Amazon founder Jeff Bezos’ plans to monopolise the Indian market are full steam ahead, despite revealing he will step down from his role as CEO of the company later this year.
Bezos first entered the Indian market in 2014, with a US$2 billion cheque at the ready to build Amazon in India. Last year, Bezos revealed he was investing billions again to create one million new jobs in India over the next five years.
But his transition to chairman of the company comes as the company takes on India’s Reliance Industries, a huge multinational conglomerate owned by India’s richest man, Mukesh Ambani.
And, the prize is India’s booming retail and ecommerce markets.
Read more: Meet Asia’s richest man, Mukesh Ambani
The Future Group battle
Two of the world’s richest men have entered a legal stoush over the acquisition of Future Group - a brick-and-mortar retail chain on the verge of collapse.
Amazon took Reliance to court over its US$3.3 billion deal to purchase Future Group, arguing it should be put on hold after Amazon objected to it last year.
Amazon has a stake in the retail arm of Future Group, Future Retail, and it filed a complaint to the Singapore international Arbitration Centre when news broke that Reliance was going to purchase it.
Large corporations tend to take matters to the Singapore Arbitration Centre as its seen as a neutral jurisdiction to settle disputes.
Amazon said the 2019 deal it struck with Future Group included a non-compete clause, which listed 30 restricted parties the company couldn’t do business with.
Reliance Industries was one of those parties.
While the arbitration process is confidential and nothing has been made public, Reuters reported a legal order seen by the publication showed an emergency arbitrator ordered a temporary halt on Future Group’s dealings with Reliance.
The Delhi High Court also ruled in Amazon’s favour, saying it was satisfied that “immediate orders are necessary to protect the rights” of Amazon.
What’s at stake in the Reliance and Future Group deal?
Amazon currently has 31.2 per cent of the market share in India’s ecommerce industry, according to CNN. Walmart-owned Flipkart currently has the majority at 31.9 per cent.
But Ambani wants to completely turn the market on its head, with his growing online supermarket business, JioMarket. So, purchasing Future Group would give him access to a huge part of the market.
But analysts say owning Future Group is not the be all and end all.
"It's not like without it you can't have your ambitions, if you don't have Future [Retail]," research analyst at Counterpoint Research, Tarun Pathak told CNN.
Instead, it’s a bit of power play.
"If someone backs down, it will give the impression that one has lost and the other has won, when the fight has just started,” he said.
Battle for India
This isn’t the only ecommerce battle taking place in India.
Back in 2020, Amazon took on Walmart’s Flipkart during Diwali, a major festival in India, with each retailer hosting its own mega sale to attract customers.
"Flipkart and Amazon are neck-to-neck in the e-commerce wars, in terms of their product offerings, their initiatives to bolster affordability and increase consumer confidence, and most importantly, their last-mile delivery initiatives," head of the Industry Intelligence Group at research firm CMR, Prabhu Ram, told CNN.
When it comes to tech, Ambani’s Jio Platforms is one of the biggest players now, after a US$15 billion investment into his company from Facebook, TPG and Saudi Arabia made his Reliance Industries net-debt free.