GoTo and TikTok Nearing Full Compliance with Indonesia’s Social Media Transaction Regulations

Indonesian tech giant GoTo and its Chinese-owned partner TikTok are on track to fully comply with Indonesia’s regulations banning in-app transactions on social media platforms. According to GoTo’s CEO, compliance is expected to be reached within the next six weeks.

The announcement, made on Wednesday, aims to ensure that GoTo and TikTok operate in accordance with Indonesia’s trade regulations, aligning their business practices with the country’s legal framework.

Following the merger between GoTo’s Tokopedia e-commerce arm and TikTok Shop Indonesia, GoTo CEO Patrick Walujo stated that the compliance process is progressing smoothly and is expected to be finalized within the next six weeks. He highlighted that this integration would not dilute GoTo’s ownership of Tokopedia and emphasized that quarterly e-commerce service fees from Tokopedia would immediately contribute to GoTo’s cash flow.

Last month, TikTok, under ByteDance ownership, completed an investment transaction with GoTo Group’s unit Tokopedia, taking majority ownership. This move, valued at over $1.5 billion, aims to enable TikTok to resume its shopping app services in Indonesia. The investment comes after TikTok Shop’s suspension of e-commerce transactions in Indonesia due to regulatory restrictions imposed on social media e-commerce platforms in October 2023.

Indonesia’s ban on e-commerce transactions within social media platforms last year hindered TikTok’s sales aspirations in the country until its partnership with GoTo. Despite this setback, TikTok has now resumed its e-commerce services through Tokopedia following their collaboration.

GoTo’s management disclosed during the briefing that they would be receiving quarterly e-commerce fees from Tokopedia, the exact amount contingent upon Tokopedia’s gross merchandise value. Based on Tokopedia’s recorded GMV of $2.9 billion in the third quarter of last year, GoTo anticipates an e-commerce service fee totaling $11.4 million.

Furthermore, GoTo foresees that its collaboration with TikTok will benefit not only its e-commerce operations but also its financial services segment. By leveraging this partnership, GoTo aims to offer digital payment solutions and “buy now, pay later” credit options to users on the TikTok platform, expanding its reach and enhancing its service offerings.

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