Why AWS has taken Meesho to court in India
What's the story
Indian e-commerce giant Meesho is embroiled in a legal battle with Amazon Web Services (AWS) India, one of its major technology vendors. The dispute centers on alleged non-payment of its cloud service dues. AWS has dragged Meesho to a three-member tribunal in New Delhi under the Arbitration and Conciliation Act, 1996, over unpaid dues pertaining to a Private Pricing Addendum (PPA) signed in February 2022.
Claim details
AWS claims ₹127.45cr from Meesho
AWS has claimed ₹127.45 crore from Meesho, covering "spend commitment shortfall payment amount, pending service fees, interest on the respective payments and the cost of arbitration." In response to these claims, Meesho has disputed the invoices and alleged "deficiencies in the services provided by AWS." The company also challenged the validity of PPA's minimum commitment clause.
Counterclaim
Meesho demands ₹86.49cr from AWS
Meesho has filed a counterclaim against AWS, demanding ₹86.49 crore. The company cited business losses "due to disruption of business and inadequate support provided by AWS," along with the salary costs incurred due to migration from services procured from AWS.
Operational impact
Implications of the dispute for Meesho
The ongoing dispute underscores Meesho's heavy dependence on the cloud infrastructure for its extensive value-commerce ecosystem. This includes everything from order fulfillment to payments as well as the recommendation systems. A conflict with a major cloud provider such as AWS could have both operational and financial consequences for the company.
Future prospects
Other legal battles and upcoming IPO
In its draft red herring prospectus (DRHP), Meesho revealed plans to invest ₹1,390 crore from its upcoming ₹4,250 crore IPO in bolstering its technology and cloud infrastructure. This indicates an attempt to diversify and strengthen its infrastructure stack. The AWS arbitration is just one of the many legal battles facing Meesho, which also has tax and vendor disputes worth over ₹710 crore on its plate.