Indonesia app ban forces TikTok to be creative
Chinese-owned group is battling to remain in its biggest marketplace
TikTok is devoting more resources to explore ways of saving its ecommerce business in Indonesia — such as building a new app or partnerships with local companies — as the Chinese-owned group battles to remain in its biggest marketplace.
Beijing-based ByteDance, owner of the viral TikTok video app, has put together product and technology teams in Singapore to discuss ideas after Jakarta imposed a ban. One suggestion has been to create an online commerce platform that would be separate to its video app in a bid to satisfy regulators in the south-east Asian economy, according to three people with knowledge of the matter.
Another source at TikTok said the situation was “fluid” and, although the company was not actively working on a separate app, all options were being considered. Indonesia last month banned transactions on social media platforms to ensure “fair and just” competition as well as to protect user data. The move took effect immediately and was widely seen as unofficially targeting TikTok, which debuted TikTok Shop in the country in 2021.
The company warned at the time of the September 27 announcement that prohibition would hit the livelihoods of the 6mn sellers and nearly 7mn influencers who use TikTok Shop in Indonesia. Before the ban was put in place, the Chinese company had hoped to generate about $6bn in gross merchandise value in Indonesia, nearly triple the figure from 2022, multiple people said.
Jakarta’s block added to the political backlash facing the ByteDance-owned video app from abroad. The Chinese group has suffered curbs on being used on government devices across Europe and North America.
Indonesia was the first and until now the biggest market for TikTok Shop and, given its huge success, was widely considered a potential blueprint for its ambitions in other markets, including the UK and US.
But ByteDance has struggled in the west to emulate the strong take-up of its livestream shopping model where consumers are able to purchase products within the TikTok Shop app via links in videos or live broadcasts.
Senior management, who have been spending time in Jakarta since the ban was imposed, have also held discussions with retail companies about partnerships, including with local technology champion GoTo. This would be another option they believe could allow them to continue ecommerce transactions. However, many attempts to meet more senior Indonesia ministers to discuss the issue have been unsuccessful, one of the people close to TikTok said.
While senior management are putting people and resources into building a second app, there are reservations over precedents being set in other markets.
“If we separate Shop from the main TikTok app in Indonesia, we may then be put into a position where we are forced to also do that in the US. That would be disastrous,” said one regionally focused executive for TikTok Shop
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