Alibaba-backed Trendyol hit by Turkey e-commerce ruling
TURKEY’S top court upheld a law tightening regulation on e-commerce companies in a blow to Trendyol, the market-leading firm backed by Chinese giant Alibaba.
The Constitutional Court said on Thursday (Jul 13) that the law, which restricts companies’ advertising spending and use of customer data if their sales exceed given thresholds, was in line with the constitution, rejecting an objection by the main opposition party.
The ruling should help smaller e-commerce firms to compete after rapid growth of the market since the pandemic. Turkey’s total e-commerce volume rose 109 per cent last year to over 800 billion liras (S$40.4 billion), with almost a fifth of all shopping done online, Trade Ministry data show.
It was during the pandemic in 2020 that Trendyol started to tower above its peers, according to a 2022 report by the national antitrust board. “The giant global player is investing to penetrate the market,” it said, citing “significantly high” advertising spending. Trendyol “leads the market by far,” it added, without providing figures.
Trendyol, 70 per cent-owned by Alibaba, reached a valuation of US$16.5 billion in 2021, raising funds from investors including SoftBank Group, General Atlantic, Qatar Investment Authority and Abu Dhabi sovereign fund ADQ.
Parliament approved the e-commerce law following the antitrust report. Its measures include:
- Restrictions on the use of customer information by companies with annual sales over 10 billion liras
- Restrictions on advertising spending by those with sales over 30 billion liras
- An annual license fee that rises in proportion to the platforms’ sales volume
- Ban on using cargo network for business beyond a company’s own platform if annual sales volume is above 60 billion liras
- Ban on sales of private label products, known as Trendyol’s legacy business
- The most important articles of the law will apply as of Jan 1, 2024
Trendyol, which has about 30 million customers and about 250,000 sellers on its platform, declined to comment on the court ruling when contacted by Bloomberg.
Other Turkish e-commerce players include CicekSepeti, N11, Morhipo and the Nasdaq-listed Hepsiburada. San Jose, California-based eBay ended its Turkish operations last year, citing “the ongoing competitive dynamics in the market.” BLOOMBERG
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