Politics, profit, and alleged bribery: Turkey’s booming e-commerce market struggles against monopolization

Politics, profit, and alleged bribery: Turkey’s booming e-commerce market struggles against monopolization

Time Stamp: June 16, 2023 12:05 PM
Source Node: 2728451

E-commerce in Turkey can be divided into two eras: the time before Trendyol and the time after. This company is majority-owned (86 percent, to be exact) by the Chinese e-commerce giant Alibaba. Once Trendyol and Alibaba joined forces in 2018, they quickly became Turks’ go-to online shopping destination across almost all product types.

Before we dive into the captivating twists and turns of the business landscape, which could rival an episode of “House of Cards”, let’s examine some statistics that shed light on the current market situation. According to the HSBC Global Research report (2021), Turkey’s e-commerce market is a bit like a two-horse race, chiefly controlled by Trendyol and Hepsiburada.com. While Hepsiburada.com tops sales in electronics, Trendyol leads in several categories, including fashion, cosmetics, and personal care. It is worth noting that Amazon was the newest player in the market at the time of the report and is on track to become a serious contender in a short time.

Trendyol’s stranglehold on the market was so unyielding that it nudged eBay, the first major international entrant in Turkey’s e-commerce market with a local player’s (GittiGidiyor) acquisition, towards the exit. Adding to eBay’s troubles, Amazon launched an ambitious entry into the scene, bringing along its array of Prime arsenal. These factors – Trendyol’s dominance and Amazon’s aggressive entrance – ramped up the pressure on eBay. By 2022, eBay had decided to shut down GittiGidiyor, one of Turkey’s longest-standing e-commerce platforms, which had been in operation for nearly two decades. eBay, which had acquired the site in 2016, bowed out six years later, citing the fiercely competitive climate.

These developments solidified Trendyol’s status as the e-commerce leader in Turkey, reinforcing its already formidable position. However, there were murmurs of change and regulation back in the capital city, Ankara. Such a development could potentially pose a serious challenge for this dominant platform. And this is where things started to get complicated…

Last July, Turkey introduced a new e-commerce bill that revolves around anti-trust measures, and both the opposition and ruling parties agreed on it. However, a few weeks later, the main opposition party, Republican People’s Party (CHP), unexpectedly filed a case with the Constitutional Court, aiming to invalidate certain parts of the previously supported law. At the same time, something interesting happened with journalists who had initially backed the law. Suddenly, they changed their minds and started writing against it in a unified way.

The situation became intriguing when Tuncay Mollaveisoğlu, the Editor-in-Chief of Cumhuriyet, a prominent newspaper in Turkey, declared that his article highlighting the media’s change of heart would not see the light of day in the same publication he was running. We will delve into this matter more later on, but media ombudsman Faruk Bildirici believes that this shift in the media’s perspective on the regulation can be attributed to the influence of Trendyol. While Bildirici’s allegations encompass numerous media outlets and journalists, the attention is primarily on the opposition newspaper Cumhuriyet. He claims the newspaper took 500.000 TL (around $25,000 at the time) to publish articles against the regulation as other news outlets and individual reporters did too for various sums.

Mollaveisoğlu claimed he knew of a purported bribery scandal before his tenure but was obstructed from investigating those involved. It’s worth emphasizing that his latest article concerning this matter was not published in his newspaper; he had to publish it via Twitter. As of yesterday, he has been dismissed from his position at the newspaper due to this.

Trendyol’s ascent has been nothing short of impressive, marked by a meteoric rise in trade volume. Yet, lurking beneath its shiny facade lie certain blemishes on its track record. Cast your gaze back to 2021, a time when the whispers of monopolization allegations grew louder. During this turbulent period, the company made a rather eyebrow-raising move. In a curious display of audacity, Trendyol enticed a prominent figure from none other than the Competition Authority itself—the institution tasked with keeping a watchful eye over the entire e-commerce sector.

This bold maneuver did not go unnoticed, triggering the scrutiny of the Competition Authority. Their piercing gaze probed deep into Trendyol’s practices, particularly their alleged meddling with its marketplace’s listing algorithm. Allegations had it that Trendyol had surreptitiously manipulated the algorithm in some product categories, surreally tilting the scales in favor of its own products in its marketplace—a sly maneuver that left its competitors/clients who are listing products on the platform teetering on the precipice of disadvantage.

In a rattling turn of events, it was revealed in March of the previous year that Trendyol resorted to advertising tactics that embellished reality. The regulatory body caught wind of this deceptive ploy, where Trendyol cunningly created advertisements that projected a misleading impression of generous discounts. The Turkish Competition Authority swiftly intervened, delivering a resounding blow by imposing a hefty fine of approximately 1.9M TL (around $128,000) upon Trendyol.

Now, fast-forward to the present, where the echoes of these allegations have reached the hallowed halls of justice. As the legal proceedings unfold, it is anticipated that the ripples of repercussion will reverberate not only through the media but also across the e-commerce sector, forever altering the industry’s landscape. Brace yourselves, for the repercussions are far from over.

Featured image created with Midjourney

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