TikTok and YouTube are reportedly exploring the possibility of seeking e-commerce licenses in Indonesia, following the country’s ban on online shopping through social media platforms. The move comes as Meta also considers such licensing in Southeast Asia’s largest economy, according to people familiar with the matter told Reuters.
A month ago, Indonesia’s trade ministry implemented a ban on e-commerce transactions conducted through social media. The ministry stated that this action was taken to safeguard the interests of small and medium-sized traditional merchants and marketplaces while also ensuring the protection of user data.
“One of the things that is regulated is that the government only allows social media to be used to facilitate promotions, not for transactions,” the ministry said. The new regulation, Facebook and TikTok users are unable to purchase or sell products and services.
The enforcement of the law posed a significant challenge to TikTok, as the platform had previously committed to investing substantial funds in Southeast Asia, with a primary focus on Indonesia, boasting a user base of 125 million. The investment was part of their ambitious endeavor to expand their e-commerce service known as TikTok Shop.
The popular app now intends to pursue an e-commerce license and is actively exploring the most suitable approach to achieve this goal, according to three individuals knowledgeable about the matter who spoke to Reuters. Until TikTok Shop ceased its operations in Indonesia this month, it was reportedly handling the delivery of approximately 3 million parcels daily within the country, as per information from two sources.
YouTube is also in the process of preparing an application for an e-commerce license, as revealed by two sources. However, the specific category or type of license they are pursuing was not disclosed.
In a related development, Meta Platforms, the parent company of Facebook and Instagram, has submitted an application for a particular form of e-commerce license this month. This license allows for the promotion of products on their platforms but does not facilitate direct e-commerce transactions.
According to Isy Karim, the director general of domestic trade at the Indonesian trade ministry, this permit enables vendors to advertise their goods and conduct market surveys within the apps, without supporting in-app transactions. Meta is seeking this license for its suite of apps, including Facebook, WhatsApp, and Instagram.