The Fair Trade Commission (FTC) on Thursday conditionally approved the launch of a joint venture in South Korea between Shinsegae Inc. and Alibaba Group, in what it described as the country’s first antitrust review that addressed concerns over data-driven competition.
As part of the approval, the commission bars their two e-commerce arms – Gmarket and AliExpress Koreaa — from sharing their consumer data, including cross-border transaction records and keyword search history.
In December, Shinsegae and Chinese e-commerce giant Alibaba agreed to form a 50:50 JV that will fully own both Gmarket and AliExpress Korea to cement their leadership in the fast-growing cross-border online shopping market.
“After reviewing their joint venture launch aimed at jointly operating Gmarket and AliExpress Korea, we concluded that the move is highly likely to restrict competition in the domestic cross-border e-commerce sector,” the FTC said in a press release.
“We approved the merger on the condition that Gmarket and AliExpress Korea block each other’s access to data on Korean consumers.”
DATA-DRIVEN COMPETITION RESTRICTION
The antitrust body said the conditional approval is based on its review of potential competition restrictions stemming from data concentration, lock-in effects and entry barriers.
Data is a critical driver of competitiveness in the e-commerce market, it pointed out, as online retailers are expanding personalized marketing and customized shopping interfaces.
“The integration of Gmarket’s extensive domestic consumer data with AliExpress’s global consumer preference database and advanced data analytics capabilities is expected to significantly expand and enhance the scale and sophistication of their consumer data,” the commission noted in the press release.
AliExpress is the dominant e-commerce platform in South Korea, accounting for 37.1% of cross-border online transactions.
Gmarket, with over 50 million registered members, controls 3.9% of the market as the fourth largest player.
ALIEXPRES’ AGGRESSIVE EXPANSION
The FTC also highlighted the growing dominance of Chinese goods in the domestic cross-border e-commerce market and the aggressive domestic expansion by AliExpress.
“Taking these factors into account, the commission concluded that the market share of their joint venture could significantly exceed the projected 41%,” it said.
In 2024, online purchases of Chinese goods in South Korea reached 2.9 trillion won ($2.1 billion), making up 62% of cross-border online transactions.
The FTC may extend the corrective order related to the Shinsegae-Alibaba JV after three years, following a review of changes in market conditions.
By Yeonhee Kim
yhkim@hankyung.com
Jennifer Nicholson-Breen edited this article.
