December 5, 2023

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Jakarta bans social e-commerce in blow to TikTok

Indonesia has dealt a vital blow to TikTok’s daring program to switch tens of millions of end users into buyers.

On Wednesday, TikTok, which is owned by Chinese technologies organization ByteDance, suspended its shopping system in the Southeast Asian country to comply with new government polices. TikTok Indonesia claimed in a assertion on Tuesday that its “priority is to continue to be compliant with local regulations and regulation” and as these types of will “no extended facilitate e-commerce transactions in TikTok Shop Indonesia,” commencing 5 p.m. local time on Oct. 4.

Last week, Jakarta announced that it would require tech organizations to different their e-commerce offerings from their social media apps, so banning end users from acquiring and providing products on platforms like TikTok and Fb.

Indonesia, Southeast Asia’s most significant financial system, is house to some 125 million TikTok buyers, producing it the platform’s 2nd biggest industry right after the U.S. ByteDance wager huge on the state, choosing it as the initial non-Chinese market for its social e-commerce support in April 2021. As late as June, TikTok CEO Shou Zi Chew reported the business would commit billions of dollars in Indonesia and other countries to further increase its footprint in the area.

Nonetheless past month, Indonesian President Joko Widodo complained that social-media-based e-commerce threatened the country’s micro-, small-, and medium-dimensions enterprises. Officials have beforehand accused TikTok of making it possible for predatory pricing on its platform and stated it harmed area organizations. To give an notion of the business landscape, Indonesia has far more than 64 million micro-, smaller-, and medium-measurement enterprises that add to about 60% of the country’s GDP.

How important is e-commerce to TikTok?

E-commerce is big business for ByteDance. In China, shopper spending on Douyin—the Chinese model of TikTok—increased by 76% yr on 12 months in 2022 to strike $195 billion, The Facts reported.

Still ByteDance could wrestle to replicate its Chinese results globally. In addition to Indonesia, TikTok Shop is obtainable in other Southeast Asian international locations like Singapore and Vietnam, but it faces competitiveness from players these kinds of as Shopee and Lazada, the latter of which is majority-owned by an additional Chinese tech giant, Alibaba.

TikTok is also trying to create e-commerce profits in the U.S. TikTok Store officially released in the U.S. in mid-September. But low-excellent choices and the company’s policies on sharing customer details are turning off some of TikTok’s potential partners, Fortune reported for the duration of the 7 days of the service’s launch.

The app is also in the crosshairs of U.S. lawmakers who see TikTok as a nationwide security chance. The U.S. presently bars the application from govt units, and some officials and legislators are thinking about an outright ban of the social media app.