The Law No. 7253 on the Amendment to the Law on Regulation of Broadcasts via Internet and Prevention of Crimes Committed through Such Broadcasts, published on the Official Gazette of July 31, 2020, introduced certain obligations on social network providers, defined as real persons or legal entities that enable users to create, view or share content such as text, images, sound, location for social interaction purposes on the internet medium.
Among these amendments to the Law No. 5651 on Regulation of Broadcasts via Internet and Prevention of Crimes Committed through Such Broadcasts ("Law No. 5651"), Additional Article 4 requires those foreign based social network providers which receive more than one million hits per day from Turkey, to appoint at least one person as their representative in Turkey, who will be capable of responding to the requests, notifications or notices that will be sent by the Information Communications and Technologies Authority ("ICTA"), Access Providers Union, judicial or administrative authorities, and to fulfill other obligations provided under the law.
The Additional Article 4 of Law No. 5651, also sets forth that those social network providers that fail to appoint a representative and report their name to the authorities, shall be faced with a 5-tiered sanction mechanism that would be applied based on the duration of the breach: (i) administrative monetary fine of TRY 10 (ten) million (in case the obligation is not fulfilled within 30 days as of the notification of breach), (ii) additional administrative monetary fine of TRY 30 (thirty) million (in case the obligation is not fulfilled within 30 days of the notification of the initial fine), (iii) prohibiting real or corporate tax payers residing in Turkey, to place new advertisements with the social network provider (in case the obligation is not fulfilled within 30 days as of the second fine), (iv) bandwidth throttling up to 50% (in case the obligation is not fulfilled within 3 months as of the advertisement ban decision) and (v) bandwidth throttling up to 90% (in case the obligation is not fulfilled within 30 days as of the first bandwidth throttling).
Since the amendments and obligations came into effect, several social network providers have either appointed a legal representative in Turkey or announced that they will appoint one. For the remaining social network providers, the advertisement ban decisions were published in the Official Gazette on January 19, 2021 ("Advertisement Ban Decisions")1 that prohibited Turkish resident taxpayers from placing advertisements on these social network providers, entering into new advertising agreements, or transferring money for placing the advertisements, as a result of their failure to comply with the obligation to appoint and declare a representative per Law No. 5651. However, the implementation and the consequences of these advertisement ban decisions in practice are yet to be seen, although certain insights may be gained by interpreting the relevant provisions of Law No. 5651 and ICTA`s Procedures and Principles on Social Network Providers ("Procedures").
The Advertisement Ban and its Implementation
According to the Procedures which were published in the Official Gazette on October 2, 2020, the President of ICTA ("President") has the authority to render a decision on an advertisement ban which prohibits the real and legal entities that are tax residents in Turkey to place new advertisements on the relevant social network provider and transfer funds for the payment of same.
As demonstrated in the Advertisement Ban Decisions, the Procedures explicitly state that the advertisement ban decision given by the President will be sent to the Official Gazette for publication. The underlying reason of this provision is likely the fact that advertisement ban does not merely affect social network providers but also the real persons and legal entities that are tax residents in Turkey wishing to place new advertisements to social network providers and to be able to notify these persons of the advertisement ban decision rendered by ICTA, especially since it will not be possible for ICTA to determine and identify each and every existing and potential customer to place advertisements with the social network provider.
Furthermore, the wordings of the relevant provisions indicate that placing new advertisements and transferring money in this regard to the relevant social network provider in breach, will be prohibited. Therefore, one might conclude that (i) the prohibition to enter into agreements and money transfer should be limited to the advertisement services between the relevant entity and the social network provider and (ii) the previous advertisements and former agreements will not be within the scope of the advertisement ban. However, ICTA's own interpretation will only be apparent once ICTA starts implementing the advertisement ban on social network providers.
The Procedures also state that the issues regarding the implementation of the advertisement ban decision will be monitored by the relevant public institutions and organizations. Although, the Law No. 5651 and Procedures do not clearly specify which public institutions and organizations will be deemed relevant, the Advertisement Board (established under the Ministry of Trade) may be authorized to examine these commercial advertisements ex officio, or upon application of consumers, as such is the first institution that comes to mind considering the scope of its duties and authorities.
Bandwidth Throttling and Other Possible Outcomes of Non-Compliance with Advertisement Ban
The Additional Article 4 of Law No. 5651 does not provide any insight on the penalties and/or sanctions that the tax resident real persons or legal entities in Turkey, or the social network providers could face in the event of non-compliance with the rules set forth with regards to the advertisement ban.
However, Article 27 of the Turkish Code of Obligations stipulates that contracts in breach of mandatory rules of the law will be deemed null and void. Therefore, entering into a new agreement with these social network providers for advertisement services might be considered to be in breach of mandatory rules under Law No.5651, and could render these new agreements null and void.
On the other hand, it is still not clear whether placing an advertisement on a social network provider who fails to appoint a legal representative will have consequences in terms of advertisement law or other regulations. However, the Advertisement Ban Decisions state that in order to ensure enforcement of the advertisement ban decision and to detect any violations, the matter shall be monitored and the necessary actions per the relevant legislation (including the Turkish Code of Obligations, Turkish Commercial Code, Turkish Criminal Code, Law on Misdemeanors, Consumer Protection Law, Law on the Prevention of Laundering Proceeds of Crime, Law on the Prevention of Financing Terrorism, Law on the Procedure for Collection of Public Receivables, Tax Procedure Law and other tax laws, Law on the Protection of Competition, Law of Banking, Law on Debit and Credit Cards, Law on Financial Leasing, Factoring and Financing Companies, Law on the Central Bank of Republic of Turkey, Law on Payment and Payment Instruments Agreement Systems, Payment Services and Electronic Money Institutions), to be taken by the relevant public institutions and organizations.
In terms of the social network provider, there is already another step envisaged within the 5-tiered mechanism in case they fail to fulfill their obligation within 3 months as of the advertisement ban decision. Accordingly, the relevant social network provider will be subject to bandwidth throttling up to 50%, and in case the obligation is not fulfilled within 30 days of this sanction, then bandwidth throttling will be increased to 90%.
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in March 2021. A link to the full Legal Insight Quarterly may be found here
1 See https://www.resmigazete.gov.tr/ilanlar/eskiilanlar/2021/01/20210119-4-1.pdf (last accessed on January 27, 2020)
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