Rapidly rising social media app TikTok, which is owned by China-based ByteDance, has resumed its Indonesian e-commerce operation through the acquisition of a 75% controlling stake of Tokopedia, 

the e-commerce arm of Indonesian tech conglomerate GoTo, in a deal worth US$1.5 billion (about Rp 23.4 trillion). 

The partnership, the first of its kind for Indonesia, will commence with a pilot period carried out in close supervision by relevant regulators, the companies said in a joint statement. 

“We are creating an Indonesia e-commerce champion, combining Tokopedia’s strong local presence with TikTok’s mass market reach and technological prowess,” GoTo CEO Patrick Walujo said, as quoted by Reuters. 

The deal came after the Indonesian government banned online shopping on social media platforms this September, citing the need to protect micro-and-small enterprises and users’ data, which resulted in the initial closing of TikTok’s e-commerce operations in the country soon after.  

Following the ban however, rumors were already circulating that Tik-Tok was planning to acquire one of Indonesia’s local e-commerce platforms as it seeks to convert its 125 million Indonesian users into a significant source of revenue.  

The deal with Tokopedia, Indonesia’s largest e-commerce platform with around 67 million users, would pit TikTok against established rivals Shopee, owned by Singapore-based Sea Group, and Lazada, owned by Chinese e-commerce giant Alibaba. 

As reported by KataData, Goto’s recent financial report shows a positive trajectory in its e-commerce business. In the first nine months of 2023, third-party segment gross revenues increased to Rp 6.63 trillion from Rp 5.97 trillion last year. Customer incentives notably decreased from Rp 3.11 trillion to Rp 2.33 trillion, and segment costs and expenses dropped from Rp 9.1 trillion to Rp 6.1 trillion. The overall segment loss from operations also significantly decreased from Rp 6.52 trillion to Rp 2.07 trillion. 

Meanwhile, TikTok has succeeded in propelling ByteDance into becoming the world’s most valuable startup with a valuation of $223 billion, according to Forbes, above Elon Musk’s SpaceX – valued at $140 billion.  

Additionally, ByteDance has also shown remarkable financial trajectory. In 2020, the company reported revenue of $34.3 billion with an operating loss of approximately $2 billion. In 2022, it reported a staggering revenue of US$85 billion, accompanied by an operating profit exceeding US$20 billion. 

Trial Period 

Indonesia’s Trade Minister Zulkifli Hasan said the government would closely monitor the e-commerce partnership for three to four months as it assesses its impact on micro-and-small businesses. He said the Trade Ministry would audit both TikTok and Tokopedia following the trial period, focusing largely on the sale of local products.  

Indonesia’s stance in this regard reflects the growing wariness of the region’s governments towards the influx of foreign products stemming from the explosive growth of e-commerce platforms. Malaysia, for example, is contemplating the issuance of a regulation targeting social commerce, with the Malaysia Communication and Multimedia Commission planning to unveil a framework within a month. 

Indonesia’s e-commerce industry is forecasted to be worth about $160 billion by 2030 from $62 billion this year, according to a report by Google, Temasek and Bain & Co, or almost half of the region’s major e-commerce value of $380 billion.