26-10-2023 (JAKARTA) In the wake of Indonesia’s recent ban on e-commerce transactions through social media platforms, TikTok and YouTube are reportedly considering following Meta’s lead by seeking e-commerce licenses in Southeast Asia’s largest economy, according to sources familiar with the matter.
The Indonesian trade ministry instituted the ban a month ago, citing reasons such as safeguarding small and midsize offline merchants and marketplaces and ensuring the protection of user data.
Indonesia, with a population exceeding 270 million, recorded nearly $52 billion in e-commerce transactions last year, as per data from consultancy firm Momentum Works.
The ban hit TikTok particularly hard, as the platform had previously pledged to invest substantial sums in Southeast Asia, with a major focus on Indonesia, where it boasts a user base of 125 million. TikTok had ambitious plans to develop its e-commerce service, TikTok Shop.
The app, owned by the Chinese tech giant Bytedance, is actively exploring avenues to obtain an e-commerce license, with three individuals familiar with the situation revealing that TikTok is in discussions for potential partnerships with local e-commerce entities, including GoTo’s Tokopedia. Simultaneously, it is working on creating a standalone TikTok Shop application tailored for the Indonesian market.
TikTok Shop had been a key player in the Indonesian e-commerce landscape, delivering approximately 3 million parcels daily until its operations ceased this month, as reported by two inside sources. However, TikTok has neither confirmed nor denied its intentions to seek an e-commerce license, and Tokopedia has not provided an immediate response to requests for comment.
Alphabet’s YouTube is also contemplating the application for an e-commerce license, although the specific type of permit is yet to be clarified, according to two sources. In the United States, YouTube introduced a shopping service that allows creators to promote products and brands on its platform.
When approached for a statement, a spokesperson for YouTube declined to comment. This move by TikTok and YouTube to seek e-commerce licenses in Indonesia has not been previously disclosed.
Meta Platforms, the parent company of Facebook and Instagram, has already taken steps by applying for a particular type of e-commerce license this month. This license will enable the promotion of goods on Meta’s platforms, although direct e-commerce transactions will not be permitted, explained Isy Karim, the director general of domestic trade at the Indonesian trade ministry. Meta is pursuing this permit for its apps, including Facebook, WhatsApp, and Instagram. However, Meta did not respond to requests for comment regarding this development.
Isy Karim stated that neither YouTube nor TikTok has contacted authorities to initiate the application process. If TikTok were to proceed with an application, it would need to establish a domestic unit within the country
