In response to the ban on TikTok Shop in Indonesia, the company is currently in talks about the possibility of investing in one of GoTo Group's businesses in Indonesia. This is one of the options the Chinese company is considering to restart its online store activities in Indonesia's largest e-commerce market.
The deal is likely to be finalized in the coming weeks, according to several sources close to the development. As an alternative to direct investment, there could be a joint venture deal between the two, according to the sources, who preferred to remain anonymous due to the confidential nature of the information.
The discussions also include the two companies engaging in a joint effort to build an innovative e-commerce platform, the sources said. The configuration is designed to overcome regulatory barriers and allow TikTok to reinvigorate online shopping services in Southeast Asia's largest retail market.
Although the deal is currently under discussion, there is a risk that the talks may not go well. The success of the deal will also depend on regulatory approval, while noting that a direct investment in Tokopedia, Indonesia's largest e-commerce player, could improve TikTok's relationship with the government.
For GoTo, the deal with TikTok carries risks as it helps a major online retail competitor survive in Indonesia. However, the deal also gives GoTo a strong global social media partner, potentially increasing transaction volume for both.
On the other hand, TikTok has been seeking cooperation from the government and other social media platforms to restart e-commerce services in Indonesia. Indonesia's Minister of Communications and Informatics, Teten Masduki, revealed that TikTok has spoken with five companies, including Tokopedia, PT Bukalapak.com and Blibli, to explore opportunities for cooperation.
In September, Indonesia issued regulations requiring TikTok to separate TikTok Shop from the TikTok app. This move created challenges for TikTok in its e-commerce business competition with Sea Ltd. and GoTo in Indonesia. As the only platform directly affected by the regulation, TikTok quickly shut down its online shopping service in Indonesia to comply with the regulation.
Following the restrictions in Indonesia, Malaysia said it was reviewing regulatory options for TikTok and its e-commerce operations. The social media giant has faced threats of bans and surveillance in several countries, including the United States, Europe and India, citing national security concerns.