Alibaba's partnership with Shinsegae receives approval, subject to certain conditions
The South Korean Fair Trade Commission (FTC) has conditionally approved a joint venture between Shinsegae Group's e-commerce unit Gmarket and Alibaba Group's AliExpress, marking a significant moment in the evolving scrutiny over data consolidation in the digital economy.
Currently, AliExpress holds a leading 37.1 percent market share in the cross-border direct import market, while Gmarket ranks fourth with 3.9 percent. If the joint venture goes ahead, the combined entity would control 41 percent of the market.
The FTC expects the joint venture to allow Korean sellers to more easily tap into overseas demand through global shopping platforms such as AliExpress. However, the regulatory body expressed concern over the potential integration of Gmarket's 50 million domestic consumer profiles with Alibaba's global behavioral datasets, AI-powered pricing algorithms, and cloud-based analytics.
To address these concerns, the FTC has imposed several safeguards. The joint venture partners must maintain Gmarket, Auction, and AliExpress as separately operated entities. Robust data firewalls must be established to prevent any data sharing between platforms. Technical barriers must be implemented to block backend system integration and algorithmic overlap.
Lee Byung-geon, director general of business trade and M&A bureau at the Fair Trade Commission, stated that this ruling is significant in the digital economy. He believes the partnership could inject new vitality into Korea's reverse direct purchase market. However, the FTC believes the measures are necessary to prevent the joint entity from having unrivaled predictive power over Korean consumers' preferences, behaviors, and price sensitivities.
The FTC-imposed safeguards are designed to mitigate the risks of a "full-cycle consumer lock-in" and potential undermining of fair market competition. This is the first time in Korea's merger review history that a ruling directly addresses the antitrust risks of data integration in the digital economy.
The approval is subject to strict conditions preventing the integration of domestic consumer data between the two companies. The joint venture is expected to impact the competitive landscape of South Korea's e-commerce sector. This landmark moment in the evolving scrutiny over data consolidation underscores the growing importance of data protection and competition in the digital economy.
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