TikTok is investing $1.5 billion to get back into online shopping.
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TikTok is investing $1.5 billion to get back into online shopping.

As part of its efforts to restart its online shopping business suspended by Southeast Asia’s largest economy, TikTok plans to invest $1.5 billion in Indonesia’s GoTo Gojek Tokopedia’s e-commerce division.

In October, Indonesia banned online shopping on social media platforms to protect smaller merchants and users’ data. This forced TikTok to close its e-commerce service TikTok Shop.

The short video app operator launched TikTok Shop earlier this year to compete with fast-growing online sellers such as Shein and PDD Holdings’ (PDD) Temu, whose viral marketing on TikTok helped their rapid growth.

The stock of GoTo, which operates in the ride-hailing, delivery, and financial services sectors, plunged 8.3% after the announcement as some investors profited from the stock’s recent rally.

According to Pilarmas Investindo Sekuritas analyst Maximilianus Nico Demus, “We need to see what kind of market disruption this partnership will bring.”.

For $840 million, TikTok will acquire 75.01% of GoTo’s Tokopedia, Indonesia’s largest e-commerce platform, and incorporate TikTok Shop’s Indonesia business into Tokopedia.

“The strategic partnership will start with a pilot period under the close supervision of the relevant regulators,” the two firms said in a statement on Monday.

Approximately 270 million Indonesians are active on social media.

China’s ByteDance owns TikTok, which has 124 million users in the Southeast Asian country and is looking to turn those users into major e-commerce revenues.

Both companies said that the transaction will be completed in the first quarter of 2024 and TikTok will provide Tokopedia with a promissory note for $1 billion.

“TikTok has committed to invest over $1.5 billion in the enlarged entity over the next several years, in order to provide the business with future funding in the future, without diluting GoTo’s shareholding in the company,” they said.