How TikTok saved its Indonesia e-commerce ops

It partners Indonesian firm Tokopedia to skirt ban on it processing online payments

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JAKARTA - A year ago, TikTok's e-commerce business in Indonesia was thriving. With its viral videos, TikTok had become a worldwide phenomenon and it was translating its influence into a powerful new revenue stream by letting users buy and sell things while its videos played.

Indonesia was a critical market and the first place where TikTok rolled out this feature. The app, owned by the Chinese tech giant ByteDance, had about 130 million users, nearly as many as it had in the US. Since its launch here in 2021, TikTok Shop had become one of the most popular places for Indonesians to buy things online.

Then one day, TikTok said it was removing Shop from its app in Indonesia. The government had declared that social media platforms would no longer be allowed to process online payments. TikTok was thus forced to abruptly halt its e-commerce operations.

Some Indonesian officials argued that TikTok was so popular it threatened to monopolize online shopping, while others said it did not have the right license. TikTok's defenders in the industry said the government was acting on behalf of TikTok's competitors in Indonesia.

The government's edict did not name TikTok. It did not need to. No other app blended social media and e-commerce the way TikTok did.

Dealing with official scrutiny is familiar terrain for TikTok. The government in India, once home to the app's largest audience, banned TikTok in 2020 as payback for a violent border dispute with China. In the US, TikTok is facing a possible ban that could begin as soon as January after spending years fielding concerns about its influence and security.

But the threat in Indonesia had the potential to deal an especially devastating blow to ByteDance's ambitions to make a lot of money with e-commerce. ByteDance wanted TikTok to repeat the success of its sister app, Douyin, whose live-video shopping business in China topped US$200 billion (S$265 billion) in transaction value in 2022.