Alphabet in talks to invest in Flipkart: here’s why

Although no deal has been signed, several people close to the company have thoughts on why a deal would make sense.

“Rumors of Google investing in Flipkart have swirled around for a bit, but I suspect the timing and vehicles of investment never lined up as well as it does with this Walmart deal,” says Punit Soni, Flipkart’s former chief product officer, who also worked at Google for eight years. He currently runs a health-tech startup called Suki.

Soni, who has no direct knowledge of a deal, speculates that Alphabet’s would be less directly related to e-commerce, and more tied to the size of the market and keeping ahead of Amazon, which was also reportedly interested buying Flipkart.

“There is a strong benefit in people buying a lot of Android phones and e-commerce in India is a huge conduit for that,” Soni said. “So there’s a little bit of a ‘next billion users’ strategy and a bit of making Amazon sweat.”

In the United States, Google and Walmart have already teamed up against Amazon through the search giant’s Express shopping service, which allows users to have Walmart products delivered through Google.

Alphabet may also be interested in Flipkart as a way to get a leg up against cloud rivals Amazon and Microsoft.

An executive at Flipkart, who asked not to be named as they were not authorized to comment on these issues, speculated that investing alongside Walmart would keep Alphabet involved in Indian e-commerce while also giving it inroads to promote the use of its enterprise technology.

Amazon is the cloud leader, but number-two cloud provider Microsoft, which invested $1.4 billion in Flipkart alongside eBay and Tencent last year, is currently Flipkart’s exclusive cloud provider. If Alphabet took a stake, that could give its up-and-coming cloud business a seat at the table in future negotiations.

An Alphabet spokesperson declined to comment.

WATCH: Can Walmart stop the bleeding with Flipkart deal?

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