CCI Authorises Alphabet's Purchase of Stake in Flipkart, a Walmart subsidiary

Nitin Konde, Varun Bhardwaj

Nov 28, 2024 — 2 min read

CCI Approves Alphabet’s Stake Purchase in Walmart’s Flipkart

The purchase of a portion of Flipkart, a Walmart group company, by Alphabet affiliate Shoreline International Holdings LLC has been authorised by the Competition Commission of India (CCI). A wholly owned subsidiary of Alphabet Inc., the parent company of Google, Shoreline International will purchase shares in Flipkart.

According to the CCI, the deal entails an investment in Flipkart Pvt Ltd as well as a contract for particular service provisions between an Alphabet affiliate and Flipkart's subsidiary. The primary activities of Flipkart, a prominent e-commerce platform, are marketplace-based e-commerce services and wholesale trading. The CCI revealed in a post on X that the Commission had authorised the subscribing of Flipkart Pvt Ltd shares by Shoreline, a subsidiary of Alphabet Inc.

Flipkart’s Recent Funding

Google joined Walmart in contributing $350 million as a minority investor in Flipkart's extended investment round in May. With this investment, the domestic marketplace's valuation increased to $36 billion, bringing its total capital to $950 million. Google's financing was meant to help Flipkart expand into new financial and fast commerce enterprises as well as into established major categories like Cleartrip and Shopsy.

According to Flipkart's official announcement, Google's proposed investment and its cloud collaboration will help the company grow and modernise its digital infrastructure so it can serve customers nationwide. Walmart, the company that controls 85% of Flipkart, strengthened Flipkart's standing in the market by contributing $600 million to the fundraising effort.

Streamlining Regulations

The CCI pointed out that Alphabet's stake is an "extremely small and non-controlling acquisition of shareholding" and affirmed that Flipkart and Alphabet will continue to function separately. As stated in its order, the competition watchdog stressed that the focus of its investigation was possible impacts on the cloud services market in India.

However, CCI stated in the order that if the Hon'ble Commission were to evaluate the impacts on competition, it should only consider the markets that are directly impacted by the proposed merger, specifically the Indian cloud services market.

Flipkart’s Dominance in the Indian Market

With the $36 billion investment, Flipkart is the market leader in India's e-commerce sector, catering to hundreds of millions of customers in smaller cities and villages. According to Bernstein, Flipkart, which also owns the fashion e-commerce company Myntra, controls roughly 48% of the Indian e-commerce market.

Amazon, Meesho, which is supported by SoftBank, Reliance Retail, and an expanding number of quick-commerce applications, are competitors of Flipkart. The largest retail chain in India is operated by Reliance Retail, which is rapidly trying to develop an e-commerce strategy. It is owned by Mukesh Ambani, the richest man in Asia. Last year, QIA, ADIA, and KKR invested close to $2 billion in Reliance Retail, which was valued at $100 billion. According to Bernstein, India's e-commerce market is expected to reach a value of $133 billion by the following year.