The Fair Trade Commission granted conditional approval for the corporate combination between Gmarket and AliExpress. The decision was based on the view that combining the domestic consumer data held by the two companies could restrict competition in the online cross-border shopping market.
According to the Fair Trade Commission on the 18th, the Shinsegae corporate group and the Alibaba Group sought to form a joint venture and, through it, pursue a combination to jointly control Gmarket and AliExpress. After review, the commission determined that the potential for increased market concentration was high and set conditions barring the two companies from sharing domestic consumer information.
The combination is a transaction tying together Gmarket, which operates the domestic online shopping malls "Gmarket" and "Auction," and the cross-border shopping platform "AliExpress." In the current cross-border shopping market, AliExpress ranks first with a 37.1% share, and Gmarket ranks fourth with 3.9%. Once the combination is completed, their combined share will exceed 41%, widening the gap with rival businesses.
The commission saw that combining the massive data held by the two companies could accelerate the expansion of market power. Gmarket holds information on more than 50 million members in Korea, and AliExpress has accumulated purchase and rating data from over 200 countries worldwide. If combined with the Alibaba Group's cloud and artificial intelligence analytics technologies, enhanced targeted advertising and service quality could intensify a "tilting effect."
In that case, competing platforms would have to undertake large-scale investments to make up for their data disadvantage, and barriers to new entry could also rise. The commission also noted that users becoming locked in to specific services could be reinforced, posing a risk that personal information protection and data security standards could regress.
Accordingly, the commission imposed corrective orders on the following conditions: independent operation of Gmarket and Auction and AliExpress; technical separation of domestic consumer data; prohibition on using the other platform's data; guaranteeing user choice outside the cross-border shopping domain; and maintaining efforts to protect personal information. The measure will apply for three years and may be extended depending on market conditions. The two companies must also establish a compliance monitoring committee and report regularly to the commission.
A Fair Trade Commission official said, "This measure is the first case in which we conducted a full review of the potential anticompetitive effects of data combination in the online cross-border shopping market and designed corrective measures," adding, "It can help prevent consumer harm while also contributing to developing overseas sales channels for domestic sellers."