Indonesia's recent prohibition on social media commerce, aimed at protecting local businesses, has posed a significant challenge for TikTok's e-commerce venture, TikTok Shop. This comes as a blow to the firm in a key market where the app is widely accessible, but transactions are now restricted due to the new regulations.
The decision to bar social media commerce transactions was influenced by concerns raised by figures such as Teten Masduki and Zulkifli Hasan. They flagged potential threats to small businesses and warned against monopolistic tendencies.
Despite these concerns, some merchants have voiced their opposition to the new regulations. Dennies Soesanto, one such merchant, argued that the move hinders business growth. According to Soesanto, TikTok facilitated transactions worth $2.5 billion involving six million sellers.
The Indonesian market is currently dominated by e-commerce giants Shopee and Tokopedia. Amidst this competitive landscape and the new regulatory restrictions, TikTok CEO Shou Zi Chew is considering separate e-commerce pursuits.
This development comes amidst wider global restrictions on TikTok's parent company, ByteDance, in Australia, Canada, Europe, and the US. The implications of these various restrictions on ByteDance's global operations remain to be seen.
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