An INR 127 Crore Conflict: Meesho vs AWS, and the Power Imbalance in Cloud Meesho is locked in a INR 127 crore arbitration tussle with AWS over alleged uncleared cloud bills.

In recent years, Amazon's AWS (Amazon Web Services) has become the go-to platform for companies of all sizes for cloud services for reasons like scalability, pay-as-you-go, and on-demand access, among others. But a recent disclosure by IPO-bound Meesho in its updated DRHP filing sheds new light on what appeared to be a bonhomie between businesses and AWS.

In its draft IPO papers, Meesho disclosed that it was involved in arbitration proceedings with AWS in relation to invoices raised by them against services provided, which Meesho alleges were deficient.

Meesho alleges that AWS has initiated arbitration proceedings against the company before a three-person arbitral tribunal in New Delhi (the "Arbitral Tribunal") under the Arbitration and Conciliation Act, 1996, as amended, for alleged non-payment of invoices raised by AWS pursuant to a private pricing addendum ("PPA") dated February 25, 2022, executed between AWS and Meesho.

"... our Company has disputed the invoices raised by AWS, alleging deficiencies in the services provided by AWS. Further, our Company has also challenged the enforceability of the minimum commitment provisions under the PPA and the applicability of AWS's online customer terms and conditions," Meesho said.

The e-commerce company further disclosed that AWS has sought INR 127.45 crore (INR 1,274.5 million, USD 14.4 million). In response, Meesho filed a statement of defense and counterclaim on January 31, 2025, with the Arbitral Tribunal. Meesho's counter petition seeks dismissal of AWS's claims and also counterclaims amounting to INR 86.49 crore (INR 864.9 million). Meesho says this counterclaim includes losses incurred from business disruption and inadequate AWS support, salary costs caused by migrating from AWS services, and associated interest and costs.

Entrepreneur India has reached out to Meesho for more details. We will incorporate their inputs as soon as we hear from them.

"We can't comment on an ongoing dispute," said an AWS spokesperson.

Rumbles in the Cloud

Amazon's AWS has a huge presence in the global cloud market. According to Statista, it had nearly 30% of the market share as of the second quarter of 2025, much higher than Microsoft Azure (nearly 20%) and Google Cloud (nearly 13%). The big three together hold more than 60% of the global market.

For Amazon, AWS is also among the highest revenue drivers. The cloud group reported USD 30.87 billion in revenue in the second quarter, according to the company's earnings report as of July 2025. At an operating income of USD 10.2 billion, AWS contributes to 18% of Amazon's revenue.

Meesho, too, ran on AWS for a while before it reportedly switched to Google. And for the e-commerce firm, the cloud infrastructure is very critical. The e-commerce company in its draft IPO papers noted that it planned on spending INR 1,390 crore (INR 13,900 million) for investment in cloud infrastructure in its subsidiary Meesho Technologies Pvt Ltd from the public raise.

Given Amazon's omnipresence in the cloud segment, it's natural for startups and others to choose the cloud platform. But is it all 'hunky-dory'?

A founder, on the condition of anonymity, tells Entrepreneur India that his startup began using AWS because it was being billed as a great option for startups, something that could help save costs and make scaling faster.

"But once we actually joined and looked at their pricing structure, it turned out to be quite expensive. For the kind of setup we needed, we were paying almost twice as much as what we would have paid for a VPS or a dedicated server. On top of that, they charged separately for a lot of things, like bandwidth, sudden traffic spikes, and data transfers, so the total cost kept going up," the founder said.

However, AWS now enjoys massive leverage over its large customers. Advocate Ajay Singh, founder of Delhi-based JN Law Chambers, explains that for a major enterprise customer, especially one spending crores and heading for an IPO, they can absolutely get to negotiate, though with some caveats.

"... usually you're not negotiating the fundamental terms of liability or service suspension. You are negotiating the price. You are negotiating volume discounts, private pricing addendums, and minimum spend commitments," he said.

Singh also noted that the real leverage isn't the paper contract; it's the technical lock-in.

"Migrating a complex, at-scale infrastructure from AWS to a competitor like Azure or GCP isn't like changing office suppliers. It's an eye-wateringly expensive, high-risk, multi-year engineering nightmare. AWS knows this. The customer knows this. This "switching cost" dictates the entire power dynamic, and it's what keeps even the largest, unhappiest customers paying their bills," he added.

Apart from its massive market share, AWS also holds several big contracts, including a much-talked-about 2022 multi-billion-dollar cloud computing project it was awarded along with Oracle, Google, and Microsoft by the US Department of Defence.

LegalPay founder Kundan Shahi notes that large providers inevitably hold substantial leverage due to the scale and criticality of their infrastructure. While enterprise customers can negotiate certain commercial terms, the core framework of these agreements often remains standardized, with limited room to alter risk-allocation clauses or spending commitments.

"That said, arbitration or penalty disputes aren't automatically one-sided; outcomes depend on whether the provider delivered on performance guarantees and whether the contractual commitments were commercially fair and transparent. The real solution lies in fostering more balanced partnerships, where service quality, accountability, and flexibility evolve in step with the client's business realities," Shahi added.

Cautionary tale

The arbitration between AWS and Meesho is something to watch out for as the outcome will definitely have a lasting impact on how Indian companies, specifically how smaller startups or businesses approach service providers for cloud. There's also a bit of asymmetric power dynamics in the cloud space at the moment.

Amit Chaurasia, Data Infrastructure Expert and Founder of Dataneers, tells Entrepreneur India that while large enterprises with in-house legal teams may review these agreements thoroughly, but even then, the extent to which these terms can be negotiated remains limited and depends on the relationship between the parties involved.

"For small and mid-sized businesses, there is typically no room for negotiation. They often accept standard terms without fully reviewing the contract, terms of use, or privacy policy, leaving them vulnerable to unexpected restrictions or risks later on," he added.

Chaurasia pointed out that Indian laws don't address concerns such as blocking of customer data. For instance, if a customer fails to renew a subscription or misses a payment, their access may be suspended, though some vendors allow restoration upon payment.

"However, there have also been instances where accounts were permanently blocked due to alleged policy violations, without offering the customer any recourse or respect in the process. In such situations, Indian law provides no protection to the consumer, that is a gap that perhaps needs urgent attention and reform," he noted.

Singh says that the ultimate threat of service suspension is more a tool of coercion than a practical remedy in a dispute with a major customer. While contractually permissible, the reputational and legal risks associated with shutting down a multi-billion-dollar enterprise over a disputed bill are immense.

"A provider's decision to pursue formal arbitration before taking such a drastic step indicates a calculated strategy to legitimize its claim while containing its own risk. The threat remains a powerful source of leverage, but its actual use is a sign of strategic failure," he added.