TikTok Shuts E-Commerce Service in Indonesia Following Ban

Improve the News Foundation -

Facts

  • On Wednesday, TikTok Indonesia halted its online shopping service to avoid being shut down. The move followed a government order last week, which requested the app drop its e-commerce feature.1
  • The social media giant must now obtain a license from Indonesia's Ministry of Trade and create a standalone app so it can continue operating. The country is TikTok Shop's largest e-commerce market in Southeast Asia in terms of gross merchandise value.2
  • The move to split TikTok's e-commerce from its video-sharing service was initially part of the company's attempt to protect local physical and online retailers, while the TikTok Shop was originally piloted in Indonesia.3
  • The ban on online retail transactions on social media purportedly aims to create a fair and healthy e-commerce ecosystem amid concerns over predatory pricing, possible domination of social media algorithms, and the use of personal data.4
  • Indonesia has become the first Southeast Asian nation to push back against China's ByteDance-owned app just as it was expanding its e-commerce presence. TikTok has long been under the lens in the West and in India over national security concerns.5
  • In June, TikTok CEO Shou Zi Chew announced plans to invest 'billions of dollars' in Indonesia and Southeast Asia, including more than $12M towards helping over 120K small and medium enterprises go online through TikTok Shop.6

Sources: 1CNBC, 2Tech in asia, 3BBC News, 4Associated Press, 5Bloomberg and 6Techhq.

Narratives

  • Narrative A, as provided by Jakarta globe. Jakarta has taken decisive action to balance e-commerce with physical market operations, protecting local shops from being squeezed out of business — TikTok has wisely adhered to the new rule. Like television networks, the video-sharing app can carry advertisements but cannot establish shops.
  • Narrative B, as provided by Jakarta post. While the Indonesian government claims to be leveling the field, new regulations clearly show an alignment with established players to the detriment of disruptive micro, small, and medium enterprises that have grown through digitalization. This policy may help some underprivileged businesses but is also likely to hurt technological progress in the country.

Predictions