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TikTok shopping ambitions face blow as Indonesia plans curbs to protect small sellers
- The new rules will allow ByteDance’s TikTok to advertise products, but not conduct direct transactions
- TikTok has been betting on Indonesia, the first and biggest market for TikTok Shop, as a blueprint to expand into other online-shopping markets
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TikTok’s ambition to expand in online shopping is facing a major blow from new rules in Indonesia that are set to curb its operations in its biggest e-commerce market.
Indonesia is prohibiting social media companies from facilitating direct e-commerce payments on their platforms, trade minister Zulkifli Hasan said Monday. The move, directed at ByteDance’s TikTok, means companies will only be able to advertise products but not conduct direct transactions.
The rule is part of newly tightened trade regulations that could be introduced as soon as Tuesday by the Ministry of Trade. The policy seeks to keep Indonesia’s 64.2 million micro, small and medium enterprises that contribute 61 per cent of its gross domestic product from being squeezed out by social commerce companies.
Currently, TikTok is the only social media company that allows direct e-commerce transactions on its platform.
Indonesia is the first and biggest market for TikTok Shop, and online shopping has become the app’s fastest-growing feature with a burgeoning fan base in the country. TikTok is betting on Indonesia as a blueprint to expand into other online-shopping markets, including the US.
With the new rule, Indonesia will be the first among countries in Southeast Asia to push back against TikTok.
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