Short video app TikTok plans to take a controlling stake in an e-commerce unit of a major Indonesian technology firm, PT GoTo Gojek Tokopedia.
Under the deal, TikTok will buy 75.01% of GoTo’s PT Tokopedia, Indonesia’s biggest e-commerce platform, for US$840 million and Tokopedia will acquire TikTok Shop’s Indonesia business for US$340 million, enlarging its e-commerce platform.
TikTok will invest US$1.5 billion over the long term, according to the two companies.
A pilot period is planned during which the partners will work alongside the relevant regulators. There is a reason for this. In September Indonesia banned online shopping on social media platforms in order, it said, to protect smaller merchants and users’ data. The government accused some of the popular apps and websites of predatory pricing. It’s no surprise therefore that these two companies want to ensure regulatory compliance.
As we reported at the time, TikTok ended its online retail operation in Indonesia in October after the country imposed the ban.
But will this move rescue TikTok’s shopping business in Indonesia? If it can integrate social media and e-commerce without angering the Indonesian authorities, it seems likely.
According to the UK’s Financial Times news service, some analysts feel TikTok’s takeover of a local company could not just succeed but provide a template for working in other markets, including Southeast Asia, Europe and the US. As the FT points out, Malaysia and Vietnam have also threatened to impose rules to curb the app.
In any case Tokopedia has a large local merchant base and strong logistics and payments assets. More importantly perhaps, Indonesia, a populous country with a young, mobile population, was TikTok Shop’s largest market until recently. Many of Indonesia’s over 270 million population are active social media users, and TikTok has 125 million users in the country.
