Chinese Social Media Platform Tiktok suffered a major blow as Indonesia bans E-commerce transactions on the platform. This was announced by the trade minister of Indonesia on Wednesday.
Indonesia banned the e-commerce transactions to control the unregulated e-market transactions taking place on the chinese platform Tiktok which has threatened the small enterprises and their livelihood
The government announced that the move is going to take effect immediately and that this was being done to protect the interests of offline sellers who feel threatened by the unregulated expanding e-commerce markets like China’s Tiktok. It announced that the predatory pricing on the social media platform is a threat to other market places and hence they banned it. In 2020 India too banned the chinese platform Tiktok over concerns of security and data theft. The chinese social media platform Tiktok was accused earlier of data theft and spying by the Indian officials following which the app was permanently banned in India.
Three months ago Tiktok had pledged to invest billions of dollars in South East Asia, mainly Indonesia, to build its e-commerce platform there hence it’s a big blow to the social media Platform.
Tiktok’s user base in Indonesia is huge with over 125 million monthly active users in Indonesia and so the company decided to take advantage of that huge user base into revenue generation.
The trade minister said that Social Media platforms cannot become E-commerce. The companies have a week to comply with the norms or else their licenses will be removed. Other social media platforms like Facebook and Meta were unavailable for comment.
What would Tiktok’s e-commerce regulation mean for companies in Indonesia?
This regulation would mean that the e-commerce companies like tiktok would not be able to facilitate payment options for the users.
The calls for regulation on e-commerce and social media platforms have grown in recent years. The companies which will not comply with the norms will have their business license revoked. The trade minister said that Social media can create ads but for e-commerce transactions they need to apply for a seperate license.
The country has become the first in the south East Asian region to take action against the social media platform Tiktok.
Indonesia’s e-commerce market is dominated by platforms such as Tokopedia, Shopee and Lazada but TikTok shop has managed to grab all the attention after its launch in 2021.
The experts say that this move will incur losses to social media platform Tiktok which takes commission from every sale. A Tiktok spokesperson unhappy with the ban said that they were deeply concerned with the ban and will take measures.