Indian regulators have opened antitrust investigations into hotel-booking giant MakeMyTrip and SoftBank-backed startup Oyo, officials said Wednesday.
The probes are the latest blow to Japan’s SoftBank, a major backer of startups that is already facing questions over the profitability of its investments in US-based ride-hailing platform Uber and office-sharing firm WeWork.
The Competition Commission of India launched the investigations after hospitality firms and industry bodies complained that MakeMyTrip offered preferential treatment to no-frills Indian hotel chain Oyo on its platform, stifling competition.
An “order has been passed opening investigations against MakeMyTrip and Oyo. It will take some time for investigations to proceed,” a CCI official told AFP.
The commission will look into whether a 2018 “agreement between OYO and MMT entails preferential treatment to OYO and consequent exclusion of Treebo, Fab hotel and any other hotel chain,” a CCI order said.
Nasdaq-listed MakeMyTrip and Oyo earn commissions on bookings made through their apps. The startup also runs a franchise business rebranding budget hotels and offering them to tourists looking for cheap but clean accommodation.
The CCI will also examine whether the firms violated norms by charging high fees to hotels while offering customers deep discounts.
Founded in 2013, Oyo, now valued at $10 billion after a recent share buyback, is one of the world’s biggest hotel chains and has expanded aggressively in China, the Middle East and East Asia throughout 2019.
The firm, created by 25-year-old Ritesh Agarwal, is also facing a backlash in India over its customer service record and alleged non-payment of outstanding dues to property owners.
MakeMyTrip said in a statement it was “confident of demonstrating compliance with principles of competition law.”
Oyo said it would extend “full support to the investigation.”