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On Amazon’s filing about possibly discontinuing operations in India

So, in case you believe the “Amazon may discontinue operations in India” stories (read Deccan Chronicle via PTI, Business Standard), we thought we’d point out a few things. This:

1. Is a part of a standard declaration, and is not indicative of an escalation of issues. All companies highlight regulatory developments and risk factors to investors, so that investors are made aware of risks that the company might face while doing business. Amazon has to inform shareholders of the Enforcement Directorate investigation into its business. This is not necessarily indicative of plans.

2. Is just one of a large number of risk factors that the company faces:

Other risk factors include: Interest Rate Risk; Foreign Exchange Risk; Investment Risk; We Face Intense Competition, Our Expansion Places a Significant Strain on our Management, Operational, Financial, and Other Resources; Our Expansion into New Products, Services, Technologies, and Geographic Regions Subjects Us to Additional Business, Legal, Financial, and Competitive Risks; We May Experience Significant Fluctuations in Our Operating Results and Growth Rate; We May Not Be Successful in Our Efforts to Expand into International Market Segments; If We Do Not Successfully Optimize and Operate Our Fulfillment and Data Centers; Our Business Could Be Harmed; The Seasonality of Our Business Places Increased Strain on Our Operations, Our Business Could Suffer if We Are Unsuccessful in Making, Integrating, and Maintaining Commercial Agreements, Strategic Alliances, and Other Business Relationships, Our Business Could Suffer if We Are Unsuccessful in Making, Integrating, and Maintaining Acquisitions and Investments, The Loss of Key Senior Management Personnel Could Negatively Affect Our Business, We Face Risks Related to System Interruption and Lack of Redundancy, We Face Significant Inventory Risk, Government Regulation Is Evolving and Unfavorable Changes Could Harm Our Business, We Do Not Collect Sales or Consumption Taxes in Some Jurisdictions, We Could be Subject to Additional Income Tax Liabilities, We Could Be Liable for Fraudulent or Unlawful Activities of Sellers.

3. Comes with significant caveats, and is hence is a broad warning, saying that the government might interpret laws differently from the way Amazon has, and if Amazon is in violation of any existing or future laws, or interpretation of laws, they might have to take certain actions.

4. ‘be forced to shut down entirely’ is only one of the actions that are probable, if amazon is in violation of laws or their interpretation, alongwith ‘could be subject to fines and other financial penalties’, ‘have licenses revoked’.

So please don’t fret. Law, we hope, will take its own course, and so far, this is just a standard declaration of risks. The complete statement here (Pg 35; copied below):

The People’s Republic of China (“PRC”) and India regulate Amazon’s and its affiliates’ businesses and operations in country through regulations and license requirements that may restrict (i) foreign investment in and operation of the Internet, IT infrastructure, data centers, retail, delivery, and other sectors, (ii) Internet content, and (iii) the sale of media and other products and services. For example, in order to meet local ownership and regulatory licensing requirements, www.amazon.cn is operated by PRC companies that are indirectly owned, either wholly or partially, by PRC nationals. In addition, we provide certain technology services in conjunction with third parties that hold PRC licenses to provide services. In India, the government restricts the ownership or control of Indian companies by foreign entities involved in online multi-brand retail trading activities. For www.amazon.in, we provide certain marketing tools and logistics services to third party sellers to enable them to sell online and deliver to customers. Although we believe these structures and activities comply with existing laws, they involve unique risks. There are substantial uncertainties regarding the interpretation of PRC and Indian laws and regulations, and it is possible that the government will ultimately take a view contrary to ours. In addition, our Chinese and Indian businesses and operations may be unable to continue to operate if we or our affiliates are unable to access sufficient funding or in China enforce contractual relationships with respect to management and control of such businesses. If our international activities were found to be in violation of any existing or future PRC, Indian or other laws or regulations or if interpretations of those laws and regulations were to change, our businesses in those countries could be subject to fines and other financial penalties, have licenses revoked, or be forced to shut down entirely.

Related: Amazon writes down $170M on poor Fire phone sales; Says it’s still in investment mode

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