TikTok shopping ends in Indonesia after government ban

TikTok shopping ends in Indonesia after government ban

TikTok, the short-form video hosting service owned by Chinese internet technology company ByteDance, has ended its online retail operation in Indonesia after the country imposed a ban on e-commerce transactions on social media platforms.

Associated Press reports say that the Indonesian government announced the new regulation late last week. The ruling prohibits social media companies from facilitating sales of products on their platforms.

This is, apparently, an effort to protect small businesses from e-commerce competition; the government has accused some of the popular apps and websites of predatory pricing.

This is a major blow to TikTok and its fast-growing venture in a very big market. Nevertheless, it noted that its priority is to remain compliant with local laws and regulations and was due to stop facilitating e-commerce sales in TikTok Shop Indonesia by Wednesday evening.

Indonesia’s Trade Minister Zulkifli Hasan has said that the ban aims to “prevent the domination of the algorithm and prevent the use of personal data in business interests” and “create a fair, healthy and beneficial electronic commerce ecosystem”. Marketplaces and sellers can now only offer or promote goods and services.

It does seem as though imported products sold online at low prices have hit physical retail profits in the country, notably at Southeast Asia’s largest wholesale market, Tanah Abang, where sellers at the market in Jakarta have reportedly experienced a more than 50% loss of profits. That said, the presence of TikTok Indonesia has also supported an ecosystem of millions of sellers who use TikTok Shop. 

According to AP, Southeast Asia is one of TikTok’s biggest markets in terms of user numbers, generating more than 325 million visitors to the app every month.

Other social media apps, notably WhatsApp, have moved into the sale of goods and received an enthusiastic response. The question is whether, and for how long, this trend can be stopped or slowed down by regulators.

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