If you have been following the news cycle in the e-commerce space from last few days then you would know that a new regulation that was passed in Indonesia has dealt a heavy blow on the business of TikTok, among others, who were doing e-commerce in the disguise of being a social media app which is also the reason why these new regulations were laid into effect. There were complaints received from many businesses by the Indonesian government saying that what TikTok Shop and others were doing with their e-commerce platforms was wrong. Due to this, the government took action and banned the social media apps that also do e-commerce inside them which meant that TikTok had to stop its “Shop” e-commerce section to comply with these orders.
TikTok said in a statement that “Our priority is to remain compliant with local laws and regulations,” and added that “As such, we will no longer facilitate e-commerce transactions in TikTok Shop Indonesia by 17:00 GMT+7, October 4, and will continue to cooperate with the relevant authorities on the path forward,”and also mentioned that it will end all transactions. This was also due to the ultimatum given by Indonesia’s minister to TikTok giving them a week to become a standalone app or risk being banned. We know that this can be termed as arm-twisting a business but TikTok is not all that clean so we can’t comment too much on either of them.
Indonesia’s President Joko Widodo obviously wanted to take care of the local businesses that were getting affected by the deep discounting tactics of TikTok Shop and others to run e-commerce on their apps and make people do impulse purchases as they liked what they saw inside the video. As per the company’s earlier statement, “Indonesia is TikTok’s largest Southeast Asian market and second-largest market globally with 125 million users after the U.S.” which means that they can’t afford to risk the ban on them in this market which is why decided to comply. Now, they have the option to run its e-commerce store as a standalone app but it looks like they have no such plans for now.