Report from Reuters
In Brief – Indonesia’s antitrust authority has determined that TikTok’s acquisition of leading local ecommerce platform Tokopedia could lead to monopolistic practices and is imposing two years of behavioral remedies to protect competition. TikTok acquired Tokopedia in 2023 to continue ecommerce operations in the country after the Trade Ministry banned social media companies from facilitating ecommerce transactions directly on their platforms. The antitrust investigators said that while the acquisition did not raise concerns with market foreclosure or significant entry barriers for new business players, there are strong network effect that could be used in sales strategies involving tying or bundling practices. Therefore, they are proposing several conditions for the merged parties to ensure competition and choice in payment methods and logistics services, and that TikTok account holders have the freedom to promote products from ecommerce platforms other than Tokopedia. The investigators are asking for quarterly compliance reports over two years.
Context – Indonesia was the first and largest market for TikTok Shop, a live-streaming and video-based ecommerce marketplace integrated into the core TikTok app. It was launched in 2021 and quickly grew into that country’s fifth-largest ecommerce platform, disrupting Indonesian retail both online and from traditional small shops. In response to retail industry pressure, the Indonesian Government imposed a crash regulatory change in October 2023 aimed at TikTok, prohibiting ecommerce transactions from occurring over social media platforms. TikTok, a wholly owned subsidiary of Chinese-based ByteDance, duly committed to complying with local laws and regulations and shut down TikTok Shop Indonesia. However, the Chinese digital giant soon announced that it was acquiring Tokopedia, the second largest ecommerce platform in the country, and planned to jointly develop a new online shopping service in the country. Malaysia’s Communications Minister has said that the country considering some regulation of TikTok Shop as well.