ByteDance Ltd’s TikTok is said to be in talks to invest into a unit of Indonesia’s GoTo Group, one of several options the Chinese company is weighing as it tries to restart its online shop in its biggest e-commerce market, Bloomberg reported on Thursday, quoting people with knowledge of the matter.
The companies are working on a potential investment into GoTo’s online-retail unit Tokopedia, which could be finalised in the coming weeks, the people reportedly said. Instead of a direct investment, the deal could take the form of a joint venture between the two firms, said one of the people.
Deliberations for a deal are ongoing and talks could still fall apart, the people said. A pact would also be subject to regulatory approval, the report added. A direct investment into Tokopedia, Indonesia’s largest local e-commerce player, might help to further smoothen relations with the government, according to the report.
TikTok didn’t respond to Bloomberg‘s request for comment, while a GoTo representative declined to comment.
In September, Indonesia announced sweeping regulations that forced TikTok to split payments from shopping in the country — an unprecedented separation that put a dent in the social media company’s e-commerce thrust just as it was gaining traction against rivals including Sea Ltd and GoTo. TikTok, which was immediately affected by the rule, halted online shopping in Indonesia shortly after to comply with the curbs.
According to the report, TikTok has been attempting to engage government officials and other social media companies to figure out a way to restart its e-commerce operations in the country. Last week, Indonesian minister Teten Masduki said TikTok has spoken with five companies including Tokopedia, PT Bukalapak.com and Blibli for possible partnerships, the report added.
Indonesia is the first and largest market for TikTok Shop, and online shopping has become the social media app’s fastest-growing feature with a burgeoning fan base in the country. TikTok started the shopping feature in Indonesia in 2021 and its instant success has encouraged it to expand into online retailing in other markets, including the US.
Indonesia is also among the first countries in Southeast Asia to push back against TikTok. Following the Indonesia restrictions, nearby Malaysia also said it is studying the possibility of regulating TikTok and its e-commerce operations.
Indonesia has banned e-commerce transactions on social media platforms, the trade minister said in September, a move seen as a blow to popular short video app TikTok.
The government said the move, which takes effect immediately, is aimed at protecting offline merchants and marketplaces, adding that predatory pricing on social media platforms is threatening small and medium-sized enterprises.
Indonesia Trade Minister Zulkifli Hasan told reporters then that the regulation is intended to ensure “fair and just” business competition, adding that it was also intended to ensure data protection of users, according to the report.
He warned of letting social media become an e-commerce platform, shop, and bank all at the same time.
TikTok, owned by China’s ByteDance, has 125 million active monthly users in Indonesia and has been looking to translate the large user base into a major e-commerce revenue source.