TikTok is suspending its e-commerce service in Indonesia, the first country where the social media app launched this feature in 2021. The move is a response to new regulations implemented by the Indonesian government aimed at separating e-commerce from social media platforms. TikTok’s e-commerce service, known as TikTok Shop, had become one of the biggest markets for the app, with Indonesia’s 125 million TikTok users using it for shopping and promotions.
The regulations, which were announced last week, require platforms like TikTok to separate their shopping features from their main social media services. Indonesia’s trade minister, Zulkifli Hasan, emphasised the need to prevent e-commerce from becoming intertwined with social media, stating, “Now, e-commerce cannot become social media. It is separated.” Social media platforms have been given a one-week deadline to comply with these rules or risk losing their operating licences in Indonesia.
This development comes amid the growing e-commerce market in Indonesia, which has seen substantial growth in recent years. The country’s central bank predicts that e-commerce sales will increase over sixfold from 2018 to next year, reaching 689 trillion Indonesian rupiah ($44 billion). However, with TikTok Shop’s suspension and new regulations, the e-commerce landscape in Indonesia may undergo changes, impacting both online and traditional retail businesses.
TikTok stated that its decision to suspend e-commerce transactions in TikTok Shop Indonesia is to remain compliant with local laws and regulations. While the suspension aims to adhere to the new rules, it represents a setback for TikTok’s expansion efforts in the region. The company’s CEO, Shou Zi Chew, had previously pledged significant investments in the Southeast Asia region over the next few years.
These new regulations are part of a broader trend where governments worldwide are scrutinising and regulating social media platforms, raising concerns about their impact on various aspects, including e-commerce and national security.
As TikTok navigates these regulatory challenges, it highlights the complex landscape that tech companies face in complying with evolving rules and expectations in different regions around the world.
