Key Takeaways:
- Myntra, the Walmart-owned fashion platform, is facing a $200 million enforcement case in India tied to alleged violations of foreign investment rules. While specific to India’s FDI framework, the move reflects a wider pattern in which regulatory action has shifted from policing outcomes to interrogating the structural mechanics of marketplace power and how pricing, competition, and logistics are controlled.
- Many mid-tier and digitally native fashion brands have relied on marketplace-managed logistics – like Fulfilment by Amazon or Zalando Fulfilment Solutions – as a way to scale internationally without heavy infrastructure investment. But if these systems come under regulatory pressure, the trade-off between convenience and control may start to shift.
- As scrutiny of platform structures deepens, the long-term reliability of marketplace logistics is becoming less certain. For brands that depend on these systems to scale internationally, rising regulatory attention may prompt a closer look at where control lies, and what risks come with outsourcing it.
This week, Indian authorities opened a $200 million enforcement case against Walmart-owned fashion platform Myntra. At the centre of the dispute is an alleged violation of foreign investment rules: specifically, the use of a wholesale intermediary to allow an overseas company to sell directly to Indian consumers. That’s an approach (according to regulators) that may fall outside the boundaries set by India’s foreign direct investment rules for multi-brand retail, which are intended to shore up domestic retailers by placing strict handcuffs on their foreign counterparts.
On the surface, this might seem like a jurisdiction-specific infraction, or a simple matter of regional compliance. India’s retail regulations have long drawn a distinction between running a marketplace and selling to domestic shoppers through it, particularly where foreign capital is involved (they also previously targeted Amazon and Flipkart for similar reasons). But what stands out here is the regulatory logic behind the case, rather than just the case itself, since this is what could have implications beyond India’s borders.
There are related examples (and not just recently) unfolding across regions with different legal frameworks that have raised related questions about the roles, responsibilities, and accountability of marketplaces. In the United States, the Federal Trade Commission’s ongoing antitrust case against Amazon has focused on practices that regulators say are limiting price competition and logistics independence among sellers. The specific allegations include the suppression of visibility for sellers offering lower prices on other platforms, and the tying of fulfilment eligibility to the use of Amazon’s in-house logistics service. The complaint frames these practices as reinforcing Amazon’s structural advantage, making this an Amazon-specific issue on the surface, but the undercurrent is common to India’s concerns about Myntra: that marketplaces have achieved sufficient scale that they are able to bend the rules through their own gravity.
Another example: China imposed a record 18 billion yuan ($2.75 billion) antitrust fine on Alibaba in April 2021. Regulators said the company pressured merchants through “er xuan yi” or “choose one of two” exclusivity requirements (which barred merchants from selling on rival platforms) , forcing them to commit to Alibaba’s ecosystem in exchange for better visibility. In the four years since, authorities have also sounded warnings about logistics-related dominance, which has led to tighter oversight of inventory movement and fulfilment partnerships.
These enforcement efforts aren’t identical, and they don’t always stem from the same motivations, even if the trend towards protecting domestic industries seems fairly universal. But behind the legal language, a separate question is forming: how much control should a platform really have, especially when it owns the marketplace and writes the rules for how others can use it? And when and where is it deemed useful for regulators to attempt to rein them in?
That question won’t matter right away for every brand, depending on their channel mix, the extent to which they have previously partnered with marketplaces, and how instrumental those factors are, or have been, in their expansion plans.
Luxury brands have mostly kept their distance from the third-party expansion strategy so far, relying on tightly controlled distribution and only engaging with third party platforms under strict terms. But in the mid-tier and growth segments, reliance has run deeper. Fulfilment by Amazon, Zalando Fulfilment Solutions, and white-label shipping systems have quietly underpinned expansion for a wide range of DTC and digitally native brands for the simple reason of expedience: they offer a way to tap into the tendrils needed to really expand into a new market, without the associated upfront cost.
We’ve seen this play out in several ways. Paid placement in search. Automated inclusion in recommendations. Inventory pooled in shared warehouses and routed when needed. On the surface, the transaction feels like a direct to consumer interaction, but behind the scenes, it often moves through layers the brand doesn’t control, or even need to understand.
For years, that strategy has delivered results, but it’s rested on a kind of predictability in how platforms behave, and how those platforms are treated by their host countries at a time of relative international economic stability. As regulators push for more clarity around rankings, and as that macroeconomic foundation starts to shake, visibility may no longer be something brands can take for granted. And if fulfilment systems are forced to adapt to tax changes or localisation rules, the operational scaffolding that once made scale feel seamless might start behaving differently, even subtle changes could turn into something tangibly more meaningful for them.
This kind of exposure is unlikely to show up all at once even if this, and other similar, regulatory reaches end up taking hold. In some cases, brands may feel no immediate change. In others, the effect may come gradually, through cost friction, fulfilment delays, or reductions in marketplace visibility that are hard to attribute to a single cause. In others, still, the transition could end up feeling abrupt.
There’s also an emerging question around the role of AI in shaping visibility, particularly when those systems are used to rank, recommend, or promote a mixture of domestic products and imported brands. In the EU, new laws already require gatekeeper platforms to explain how their rankings work. In the UK, foundational models are being scrutinised for how they may affect fair competition. And more globally, regulators are starting to question what happens when algorithmic tools, not people, are deciding what gets seen, sold, or prioritised – a decision-making matrix that could take on another level if its outputs are judged through a prism of protecting national industries.
None of these trends point to a weakening of platforms, necessarily. On the contrary, regulators are targeting firms whose digital systems continue to structure markets, from search and distribution, to ad tech. Enforcement may be rising, but platform dominance still shapes competition at scaling depth we haven’t seen before. What’s changing are the conditions under which brands interact with those marketplaces , logistically, commercially, and operationally – and how those conditions may no longer be as predictable or passive as they once appeared.
Some brands may already be adjusting to the idea that international expansion may mandate more direct ownership. Others may wait until changes become more visible, or may abandon markets that become hostile to a partner-first approach to making inroads.
