Name: Ambani Versus Bezos: A Fight Or A Waiting Game?
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Ambani Versus Bezos: A Fight Or A Waiting Game?

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4:30 AM IST, 03 Nov 20204:30 AM IST, 03 Nov 2020Save(Bloomberg Opinion) -- A vanilla commercial dispute is setting the stage for a clash between the world’s No. 1 and No. 6 richest men. But the&nbsp;legal wrangling&nbsp;is&nbsp;a&nbsp;sideshow. What Jeff Bezos and Mukesh Ambani are really fighting over is pole position in the only billion-plus-people&nbsp;consumer market available to both of them:&nbsp;India. A vanilla commercial dispute is setting the stage for a clash between the world’s No. 1 and No. 6 richest men. But the&nbsp;legal wrangling&nbsp;is&nbsp;a&nbsp;sideshow. What Jeff Bezos and Mukesh Ambani are really fighting over is pole position in the only billion-plus-people&nbsp;consumer market available to both of them:&nbsp;India.The ostensible battleground is a&nbsp;&nbsp;Indian tycoon Ambani’s Reliance Industries Ltd. stitched up in August to acquire assets of debt-laden local retailer Future Group. Bezos’s Amazon.com Inc. is trying to block the transaction.That, in itself, is a bit&nbsp;of a dampener. Expectations were building&nbsp;for the two billionaires to work together. In September, Bloomberg News reported that Ambani had given&nbsp;Amazon an option to of&nbsp;Reliance Retail Ventures Ltd., seeking to repeat the&nbsp;success he had earlier this year in bringing in Facebook Inc. and Alphabet Inc. as partners to&nbsp;his digital platform.By seeking to stall Ambani’s purchase of Future, Bezos may be signaling that he would rather remain a rival. Or, that&nbsp;he’s buying time to sweeten the offer currently on the table.The actual quarrel&nbsp;is only interesting when you read between the lines of the claims and counterclaims.Amazon&nbsp;bought&nbsp;a 49% stake last year in a private firm controlled by Kishore Biyani, a pioneer of modern-format retailing in the country. The investment gave&nbsp;the U.S. e-commerce giant the right to acquire Biyani’s&nbsp;shares in the publicly traded Future Retail Ltd. from the .&nbsp;Another of Bezos’s&nbsp;conditions was that Biyani wouldn’t sell his assets —&nbsp;about 1,500 stores nationwide —&nbsp;to restricted persons, including Reliance, which operates India’s largest retail chain.After the Future-Reliance deal was announced, Amazon alleged breach of contract and obtained an against the sale from an arbitrator in Singapore, a preferred neutral venue in Asia for settling disputes in cross-border agreements. The U.S. company then wrote a letter to Indian&nbsp;stock exchanges and the regulator, asking them .Future Retail has challenged Amazon’s position by&nbsp;saying that the Singapore ruling has no legal basis&nbsp;in India, and that anyway, it wasn’t a party to the&nbsp;founder’s agreement. Given the debilitating&nbsp;impact of the Covid-19 pandemic on operations, the retailer says it’s&nbsp;doing the right&nbsp;thing by all stakeholders in&nbsp;selling assets to Reliance. As for Amazon’s claim of $193 million in damages&nbsp;plus interest, that liability, if awarded by the arbitrator, should fall on Biyani’s&nbsp;private firm that did the deal, Future Retail&nbsp;argues.Biyani is just a pawn&nbsp;in a much bigger power play. Future's cash crunch didn't emerge suddenly.&nbsp;Amazon&nbsp;had ample opportunity to tiptoe&nbsp;around India’s legal&nbsp;restrictions on foreign ownership of retail chains to . But it didn’t.Amazon may&nbsp;still be interested in partnering with Ambani — at the right price.&nbsp;Other investors,&nbsp;such as&nbsp;Silver Lake Partners and , have written him checks worth $5 billion in total. They may have feared&nbsp;losing&nbsp;out on what could become India’s&nbsp;most successful mix of physical and digital shopping,&nbsp;a strategy that leverages&nbsp;Reliance Retail’s own outlets&nbsp;together with independently owned neighborhood stores connected to Ambani’s 4G phone network of 400 million users. However, the portion offered to Amazon&nbsp;would&nbsp;mean a $20 billion commitment. Bezos&nbsp;could afford to see&nbsp;how well Ambani&nbsp;executes his&nbsp;plan.Amazon’s&nbsp;India website kicked off its annual festival season last month to record sales in the first couple of days. Reliance Retail’s revenue also&nbsp;jumped&nbsp;30% in the September quarter from the previous three months. But although India’s nationwide lockdown has&nbsp;ended, not all stores have reopened fully. Footfall has yet to recover,&nbsp;especially in fashion and lifestyle and at&nbsp;stores inside malls. In Macquarie’s estimates, the next fiscal year’s earnings per share for Reliance Industries, the holding company, may be 23% below the consensus street forecast. A&nbsp;reason, the brokerage says, is stiff competition, high investment and low margins in retail.&nbsp;Reliance Industries shares fell 8.6% in Mumbai on Monday.&nbsp;Amazon’s letter to the Securities and Exchange Board of India makes a reference to India’s “ease of doing business,” which has been a from Vodafone Group Plc to Cairn Energy Plc. The regulator needs to hold&nbsp;listed firms accountable for their dealings, Amazon said in the letter, according to Reuters, which has seen a copy.The last thing India wants is more of a bad rap.&nbsp;The Seattle-based firm already has to operate with one hand tied behind its back: As a foreign e-commerce player, it can’t own inventory or openly&nbsp;discount merchandise.&nbsp;Even harsher rules —&nbsp;covering &nbsp;—&nbsp;may be on their way. It’s important for&nbsp;regulators to not give Amazon the chance to paint a commercial feud&nbsp;as another sign of India’s unfair treatment of global investors.In more ways than one,&nbsp;a&nbsp;waiting game by Bezos may not be a bad idea.&nbsp;This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.©2020 Bloomberg L.P.Add BQ Prime App to home screen.INSTALL APP

4:30 AM IST, 03 Nov 20204:30 AM IST, 03 Nov 2020Save(Bloomberg Opinion) -- A vanilla commercial dispute is setting the stage for a clash between the world’s No. 1 and No. 6 richest men. But the&nbsp;legal wrangling&nbsp;is&nbsp;a&nbsp;sideshow. What Jeff Bezos and Mukesh Ambani are really fighting over is pole position in the only billion-plus-people&nbsp;consumer market available to both of them:&nbsp;India. A vanilla commercial dispute is setting the stage for a clash between the world’s No. 1 and No. 6 richest men. But the&nbsp;legal wrangling&nbsp;is&nbsp;a&nbsp;sideshow. What Jeff...

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Andy Mukherjee

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Ambani Versus Bezos: A Fight Or A Waiting Game?

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