Popular Controversies From The Startup World

Like the BharatPe dispute, India's burgeoning startup ecosystem has seen many controversies in the last few years

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"When everything seems to be going against you, remember that the airplane takes off against the wind, not with it," said Henry Ford. The life of an entrepreneur is never devoid of challenges and disputes, both internal and external. However, sometimes these conflicts become unpleasant and come under public scrutiny.

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One such recent controversy is that of BharatPe's tussle with its cofounder Ashneer Grover. It all started after an audio clip of Grover allegedly verbally abusing a Kotak Mahindra Bank employee during a phone call went viral. Adding to the fire was the conviction of Bhavik Koladiya, a former co-founder of the startup and the current group head of product and technology, in a credit card fraud case in the U.S. One thing led to another. Grover and his wife Madhuri Grover took a voluntary leave of absence from the company, the fintech firm onboarded accounting firm PricewaterhouseCoopers (PwC) to look into the company's transactions and so on.

However, BharatPe is not the only startup that has faced such disputes. Here is the list of some popular disputes from the startup ecosystem.

Amazon Vs Future

It has been one and a half years since the conflict between Amazon and Future started. In September 2019, Amazon had acquired 49 per cent stake in Future Group subsidiary, Future Coupons, which owns 7.3 per cent shares in Future Retail. The ecommerce giant claimed that its deal had mentioned a list of 30 entities with whom the Future Coupons could not transact, including Reliance Retail.

In August 2020, Kishore Biyani-led Future Group that was on the verge of bankruptcy signed an MoU with Reliance Retail for the sale of its consumer retail arm for INR 24,713 Cr. Post this deal, Amazon initiated arbitration proceedings at the Singapore International Arbitration Centre (SIAC) and asked to block the deal. After SIAC passed interim order to restrict the deal, Future approached Delhi Court in November 2020.

The dispute reached the Supreme Court in April and in July 2021 the Competition Commission of India (CCI) sent a show-cause notice to Amazon over the deal saying it was a misrepresentation of interests and concealment of material facts. The conflict is still on with the SC recently seeking a response from the Future Group on why arbitration proceedings by Amazon against it before a Singapore tribunal should not resume.

Zoho Vs Freshworks

The SaaS giants locked horns when Zoho filed two lawsuits in March 2020 and November 2020 in a US Court. It had alleged that Freshworks built its business upon theft and misuse of Zoho's confidential business information. The Saas unicorn was launched by Girish Mathrubootham and Shan Krishnasamy, who both were former employees of Zoho.

Zoho had alleged that Freshworks had poached Zoho's employees to access its database, however, Freshworks denied the charges and in July 2020, it accused Zoho of expanding a customer data theft incident into a broader case of trade secret misappropriation.

Zoho's next complaint was in November 2020 for trade secret misappropriation and gaining illegal access to its customer database through one of its employees and asked for a minimum amount of $5,000 to be paid as damages through a jury trial. The dispute came to an end in December 2021. Freshworks, said, in a statement, "Freshworks determined that a now-former Freshworks sales employee, using his spouse's computer without her knowledge, wrongfully accessed and used Zoho confidential information relating to sales leads. These actions were not taken at the direction of Freshworks, and are contrary to our policies."

Amazon, Flipkart Vs CAIT

The clash between Amazon and CAIT is not new. It started in around 2016 when traders association accused e-commerce platforms like Flipkart of not complying with FDI norms and offering deep discounts, leading to a huge loss in business for local vendors. Here is a timeline of the sequence of events since then. In May 2016, the traders' body filed a complaint against Flipkart for violation of guidelines on FDI in e-commerce to the Department of Industrial Policy and Promotion (renamed as Department for Promotion of Industry and Internal Trade (DPIIT) in 2019). Its complaint was based on a newspaper ad announcing the sale of an item at a discounted price to be available only on Flipkart.

In May 2018, CAIT and the All India Online Vendors Association (AIOVA), said in a statement, "We have been demanding a regulatory body to monitor the trade of e-commerce marketplaces and their policies towards sellers. We had made this demand to the e-commerce Committee formed under NITI Aayog in the year 2016 where we were assured they will immediately start working on it." There have many accusations since then including CAIT claiming in November 2021, that Amazon is "actively involved in the smuggling of Marijuana through its platform".

PhonePe Vs BharatPe

What's in a name. Well, BharatPe and PhonePe don't think so. The dispute between both over name started in 2018. In August 2018, PhonePe sent a legal notice to BharatPe asking for the removal of the suffix in question.

In May 2019, PhonePe reached out to Delhi High Court, claiming trademark rights over the usage of the suffix and demanding an injunction order against BharatPe from using the name. The court refused to grant the requests. PhonePe approached the Bombay High Court in October 2021. BharatPe then moved to Delhi HC court and the dispute is still on.

Zomato Vs Restaurant Owners

In 2019, hundreds of restaurant owners voiced their anger against Zomato, Swiggy, EazyDiner, Dineout's Gourmet Passport, Nearbuy, MagicPin through a social media campaign called the #logout campaign. More than 1200 restaurants delisted themselves from food aggregator platforms. The reasons given were unreasonably high commissions, payment terms and arbitrarily applied additional charges.

Zomato then had to remove the Infinity Dining feature and limit the Zomato Gold offer to once a day. While the campaign mellowed, certain issues are still being talked about on and off.

OYO Vs Hotels

The Hotel and Restaurant Association of Gujarat and hotel associations in Mumbai, Delhi, Mysuru, Bengaluru, Kolkata and Hyderabad joined hands in December 2018 to discuss the issues with OYO. The FHRAI had said that more than 200 hotels ended agreements with OYO because of mismanagement of contracts, arbitrary charges and other disputes. They said that many more want to exit contracts.

Many protests also took place in Bengaluru, Delhi NCR, Pune, Nashik, Kota, Manali, Jaipur, among others. In July 2019, FHRAI filed a complaint with CCI. In fact, later two Bengaluru hoteliers filed an FIR against OYO founder and CEO Ritesh Agarwal for non-payment of dues of minimum guarantees. However, OYO issued a statement saying "the claims made in the complaint that has been wrongfully filed against our founder and six other office bearers, based on false allegations and exaggeration on a regular commercial dispute." Then in October 2019, CCI said it would continue to examine the hoteliers' complaints.