WMT Walmart Inc

By Newley Purnell 

NEW DELHI -- India's antitrust watchdog ordered a probe into whether Amazon.com Inc. and Walmart Inc.'s Flipkart have violated competition laws, New Delhi's latest move to try to rein in American tech giants that dominate its burgeoning internet economy.

The investigation launched by the Competition Commission of India Monday said it would focus on allegations that the U.S. titans promote "preferred sellers" of goods on their platforms, which may have hurt smaller rivals.

"It has been alleged that most of these preferred sellers are affiliated with or controlled by Flipkart or Amazon, either directly or indirectly, " the order said.

A Flipkart spokesman said the company is currently reviewing the order, and that it is "fully compliant with all applicable laws" and foreign direct investment rules. He said the company has helped give market access to hundreds of thousands of small businesses and sellers.

An Amazon spokesman said the company welcomes the chance to address the allegations. "We are confident in our compliance, and will cooperate fully" with the commission, he said. The company has in the past said it has helped small businesses and local companies sell online, boosting the Indian online shopping sector.

Hoping to match China's success at fostering their own homegrown technology companies, Indian policy makers have been taking steps to restrict U.S. players in the world's biggest untapped tech market.

Walmart in 2018 inked a $16 billion deal to acquire India's biggest local e-commerce startup, Flipkart. Between them, Amazon and Walmart's Flipkart account for more than 80% of all online shopping sales, according to Morgan Stanley.

After Walmart sealed the acquisition, India changed its rules governing how foreign-owned online retailers -- but not local companies -- sold goods online, forcing Amazon and Walmart to modify their supply chains.

The Competition Commission of India in 2018 fined Google 1.36 billion rupees ($19 million) for what it said was an abuse of its role as the country's top search engine to favor its own services.

Facebook Inc. and its WhatsApp messaging service, along with Netflix Inc. and Google's YouTube, are among the country's most used apps.

WhatsApp in February 2018 launched a trial of its first-ever digital-payment service in India, saying it hoped to roll it out to the rest of the country later. But it has yet to receive government permission to expand it nationally. Analysts say it threatens to unseat India payment startups due to WhatsApp's massive user base.

--Krishna Pokharel and Rajesh Roy contributed to this article.

Write to Newley Purnell at newley.purnell@wsj.com

(END) Dow Jones Newswires

January 13, 2020 11:29 ET (16:29 GMT)

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