TikTok to spend $1.5 billion taking over GoTo’s Indonesia shop

BLOOMBERG

ByteDance Ltd’s TikTok agreed to invest $1.5 billion in a joint venture with Indonesia’s GoTo Group that it will control, part of a pact that lets the Chinese company restart its shopping app in its biggest online-retail market.
The social media giant will combine its Indonesian TikTok Shop business with GoTo’s e-commerce unit Tokopedia, the companies said. TikTok gets a 75% stake in that combination, which will run the shopping features of TikTok’s social media app in Indonesia. GoTo fell its most since listing in 2022 on concerns it’s moving away from a potentially lucrative long-term business.
The deal is unusual for ByteDance, which is effectively taking over a prominent local online-commerce player in a major overseas market. The agreement, under which GoTo becomes a passive backer of the Tokopedia operation, allows ByteDance to restart its Indonesian business and comply with regulations introduced to halt its online-retail service just as it was gaining traction against Sea Ltd and GoTo.
TikTok benefits “as it is taking over majority ownership and operational control of Tokopedia at almost no cost — only investments into the entity,” said Jianggan Li, founder of Singapore-based consultancy Momentum Works.
GoTo fell 21% in Jakarta on investor concerns Indonesia’s largest internet company will now benefit less from the country’s rapidly growing e-commerce market.
Yet GoTo is also limiting its exposure to money-losing Tokopedia, which will let it focus on other businesses such as digital financial services, Li said.
The Indonesian government, which has sought to protect local contenders including tens of millions of its smaller enterprises, has signalled that it’s approving TikTok and GoTo’s new pact. As TikTok grew to become a major rival to Tokopedia and local commerce operators, Jakarta established regulations in September forcing social media players like TikTok to separate their payments services from content.
With the new deal, TikTok users in Indonesia can once again shop and pay for their purchases without leaving the super-popular video app, according to a message the company sent to merchants.
That’s because the shopping component is now owned by a separate entity, Tokopedia. The shopping service re-launched recently.
Indonesia is among the first countries in Southeast Asia to push back against TikTok. Following the Indonesia restrictions, nearby Malaysia said it is studying the possibility of regulating TikTok and its e-commerce operations. The social media giant is already facing possible bans and scrutiny in the likes of the US, Europe and India on national security concerns.