TikTok’s Southeast Asia ambitions to take a major hit with Indonesia ban
TOPSHOT – A staff of a small shoe manufacturer shows their new products to make an introductory video to be posted on social media in Bogor, West Java on September 27, 2023. Indonesia has banned goods transactions on social media platforms such as TikTok, Facebook or Instagram in a new regulation, its trade minister said on September 27, as Jakarta aims to rein in direct sales on major platforms it says are harming millions of small businesses.
Aditya Aji | Afp | Getty Images
TikTok’s Southeast Asian ambitions will take a major hit after Indonesia bans shopping transactions on social media apps, analysts told CNBC.
On Wednesday, Indonesia set a one-week deadline for TikTok to become a standalone app, without any e-commerce feature. If TikTok does not comply, it faces the risk of closure in the country.
“[Being a standalone app] could introduce significant friction for existing TikTok users, negatively impacting user experiences,” said Jonathan Woo, senior research analyst at Phillip Securities Research.
Indonesia has banned e-commerce transactions on social media platforms such as TikTok Shop and Facebook. This means that users are not allowed to buy or sell goods and services through such platforms.
Even if it can secure a separate license to operate, operating as a standalone app may still be challenging.
Sachin Mittal
DBS Bank
TikTok is owned by Chinese tech giant ByteDance, and is already under scrutiny from the U.S. lawmakers who are concerned about the company’s ownership structure and ties to China.
In June, TikTok’s CEO said the app will pour “billions of dollars” into Southeast Asia over the next few years as the company looks to diversify its business globally as U.S. pressure piles up.
Indonesia is TikTok’s largest Southeast Asian market and second-largest global market with 125 million users after the U.S., according to the company.
“Given that most [purchases on TikTok] are impulse buys, the need to log into a separate app might lead to a high drop-out rate,” said Sachin Mittal, head of telecom, media and technology research at DBS Bank, in a Thursday report.
Impulse buying from watching content is an advantage TikTok has, Mittal told CNBC previously.
“Even if it can secure a separate license to operate, operating as a standalone app may still be challenging,” said Mittal.
New social media rules
On Saturday, Indonesia’s President Joko Widodo called for social media regulations, saying such platforms impact micro-, small- and medium-sized companies and the economy.
“Because we know it affects MSMEs, small businesses, micro-enterprises, and also the market, there are markets where sales have started to decline due to the influx,” he said in a statement.
Crucially, the only business affected will be challenger TikTok Shop, whose entire business model relies on social commerce.
Moving forward, Indonesia requires e-commerce platforms in the country to implement a minimum price of $100 for certain items that are directly purchased from overseas. All products offered should meet local standards.
“Crucially, the only business affected will be challenger TikTok Shop, whose entire business model relies on social commerce,” said BMI in a Tuesday report, adding that it expects to see a decline in TikTok Shop’s numbers.
TikTok Shop accounted for 5% of e-commerce’s gross merchandize value in Indonesia, according to a June report by Singapore-based consultancy Momentum Works.
TikTok Shop is trailing behind Shopee (36%), Tokopedia (35%), Lazada (10%) and Bukalapak (10%), the report said.
“In our view, TikTok Shop would have to prove that its e-commerce is a separate business from its social media, with no data sharing from the backend and possibly a clear source of funding for e-commerce losses, which was funded earlier by advertising business on its social media app,” said Mittal.
TikTok ‘deeply concerned’
In response to the Indonesia’s latest move, TikTok said that it will respect local rules and regulations.
“We are deeply concerned about [the] announcement, particularly how it would impact the livelihoods of the 6 million sellers and nearly 7 million affiliate creators who use TikTok Shop,” a TikTok spokesperson told CNBC.
“We respect local laws and regulations and will be pursuing a constructive path forward,” the person added.
This comes as TikTok has been looking for growth outside the U.S., as Chinese-owned apps face political headwinds. Its flagship app was banned in Montana on personal devices, the first state to do so, as well as in India.
TikTok Shop has been aggressively expanding into Southeast Asia, competing against Sea‘s Shopee and Alibaba‘s Lazada. Those e-commerce efforts also include livestream shopping.
“In the near term, the main beneficiaries to this regulation would be existing e-commerce players like Shopee and GoTo,” said Woo of Phillip Securities Research.
E-commerce marketplaces account for a significant share of Indonesia’s digital payment figures, said BMI.
In July, the value of digital transactions in Southeast Asia’s largest economy reached an all-time high of 160 trillion Indonesian rupiah ($10.3 billion) and transaction volume amounted to 1.7 trillion. Both metrics were up 65.8% and 71.5% respectively, compared to the same period a year ago, according to BMI.
The Nasdaq MarketSite in New York, June 9, 2023.
Michael Nagle | Bloomberg | Getty Images
Silicon Valley executives and financiers publicly opened their wallets in support of President Donald Trump’s 2024 presidential run. The early returns in 2025 aren’t great, to say the least.
Following Trump’s sweeping tariff plan announced Wednesday, the Nasdaq suffered steep consecutive daily drops to finish 10% lower for the week, the index’s worst performance since the beginning of the Covid pandemic in 2020.
The tech industry’s leading CEO’s rushed to contribute to Trump’s inauguration in January and paraded to Washington, D.C., for the event. Since then, it’s been a slog.
The market can always turn around, but economists and investors aren’t optimistic, and concerns are building of a potential recession. The seven most valuable U.S. tech companies lost a combined $1.8 trillion in market cap in two days.
Apple slid 14% for the week, its biggest drop in more than five years. Tesla, led by top Trump adviser Elon Musk, plunged 9.2% and is now down more than 40% for the year. Musk contributed close to $300 million to help propel Trump back to the White House.
Nvidia, Meta and Amazon all suffered double-digit drops for the week. For Amazon, a ninth straight weekly decline marks its longest such losing streak since 2008.
With Wall Street selling out of risky assets on concern that widespread tariff hikes will punish the U.S. and global economy, the fallout has drifted down to the IPO market. Online lender Klarna and ticketing marketplace StubHub delayed their IPOs due to market turbulence, just weeks after filing with the Securities and Exchange Commission, and fintech company Chime is also reportedly delaying its listing.
CoreWeave, a provider of artificial intelligence infrastructure, last week became the first venture-backed company to raise more than $1 billion in a U.S. IPO since 2021. But the company slashed its offering, and trading has been very volatile in its opening days on the market. The stock plunged 12% on Friday, leaving it 17% above its offer price but below the bottom of its initial range.
“You couldn’t create a worse market and macro environment to go public,” said Phil Haslett, co-founder of EquityZen, a platform for investing in private companies. “Way too much turbulence. All flights are grounded until further notice.”
CoreWeave investor Mark Klein of SuRo Capital previously told CNBC that the company could be the first in an “IPO parade.” Now he’s backtracking.
“It appears that the IPO parade has been temporarily halted,” Klein told CNBC by email on Friday. “The current tariff situation has prompted these companies to pause and assess its impact.”
‘Cave rapidly’
During last year’s presidential campaign, prominent venture capitalists like Marc Andreessen backed Trump, expecting that his administration would usher in a boom and eliminate some of the hurdles to startup growth set up by the Biden administration. Andreessen and his partner, Ben Horowitz, said in July that their financial support of the Trump campaign was due to what they called a better “little tech agenda.”
A spokesperson for Andreessen Horowitz declined to comment.
Some techies who supported Trump in the campaign have taken to social media to defend their positions.
Venture capitalist Keith Rabois, a managing director at Khosla Ventures, posted on X on Thursday that “Trump Derangement Syndrome has morphed into Tariff Derangement Syndrome.” He said tariffs aren’t inflationary, are effective at reducing fentanyl imports, and he expects that “most other countries will cave and cave rapidly.”
That was before China’s Finance Ministry said on Friday that it will impose a 34% tariff on all goods imported from the U.S. starting on April 10.
At Sequoia Capital, which is the biggest investor in Klarna, outspoken Trump supporter Shaun Maguire, wrote on X, “The first long-term thinking President of my lifetime,” and said in a separate post that, “The price of stocks says almost nothing about the long term health of an economy.”
However, Allianz Chief Economic Advisor Mohamed El-Erian warned on Friday that Trump’s extensive raft of import tariffs are putting the U.S. economy at risk of recession.
“You’ve had a major repricing of growth prospects, with a recession in the U.S. going up to 50% probability, you’ve seen an increase in inflation expectations, up to 3.5%,” he told CNBC’s Silvia Amaro on the sidelines of the Ambrosetti Forum in Cernobbio, Italy.
Former Microsoft CEOs Bill Gates, left, and Steve Ballmer, center, pose for photos with CEO Satya Nadella during an event celebrating the 50th Anniversary of Microsoft on April 4, 2025 in Redmond, Washington.
Stephen Brashear | Getty Images
Meanwhile, executives at tech’s megacap companies were largely silent this week, and their public relations representatives declined to provide comments about their thinking.
Microsoft CEO Satya Nadella was in the awkward position on Friday of celebrating his company’s 50th anniversary at corporate headquarters in Redmond, Washington. Alongside Microsoft’s prior two CEOs, Bill Gates and Steve Ballmer, Nadella sat down with CNBC’s Andrew Ross Sorkin for a televised interview that was planned well before Trump’s tariff announcement.
When asked about the tariffs at the top of the interview, Nadella effectively dodged the question and avoided expressing his views about whether the new policies will hamper Microsoft’s business.
Ballmer, who was succeeded by Nadella in 2014, acknowledged to Sorkin that “disruption is very hard on people” and that, “as a Microsoft shareholder, this kind of thing is not good.” Ballmer and Gates are two of the 12 wealthiest people in the world thanks to their Microsoft fortunes.
C-suites may not be able to stay quiet for long, especially if the recent turmoil spills into next week.
Lise Buyer, who previously helped guide Google through its IPO and now works as an adviser to companies going public, said there’s no appetite for risk in the market under these conditions. But there is risk that staffers get jittery, and they’ll surely look to their leaders for some reassurance.
“Until markets settle out and we have the opportunity to access valuation levels, public company CEOs should work to calm potentially distressed employees,” Buyer said in an email. “And private company managements should refine plans to get by on dollars already in the treasury.”
— CNBC’s Hayden Field, Jordan Novet, Leslie Picker, Annie Palmer and Samantha Subin contributed to this report.
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