TikTok’s $1.5 billion Indonesian gambit appears not to have worked

TikTok really can’t catch a break with regulators. Yesterday, as expected, the European Commission launched a probe into the company’s failings on the content front—and now it looks like trouble continues to brew in Indonesia, too.

This time, the issue is TikTok Shop, the service’s push into online retailing that lets third parties sell their merchandise on the platform. Indonesia has long been key to TikTok’s e-commerce efforts. It’s the company’s second-biggest market outside the U.S., and it hosted an early pilot of TikTok Shop. Last October, Jakarta stunned TikTok and its peers by abruptly banning social media companies from conducting direct transactions within their platforms, apparently owing to predatory pricing (about which my colleague Jason Del Rey wrote entertainingly on Friday) and the negative effects on local stores.

A couple months later, TikTok said it had found the solution: buying three-quarters of the leading Indonesian e-commerce platform, Tokopedia, for $1.5 billion. The deal closed at the end of January, more than a month earlier than planned. So, with Tokopedia now handling TikTok Shop transactions, problem solved, right?

Nope. The new arrangement still allows users to buy stuff within TikTok in Indonesia, and the government—which said in December that it would keep a close eye on the TikTok-Tokopedia arrangement—is not happy. Business minister Teten Masduki said TikTok Shop was “in practice … still integrated with social media,” meaning TikTok was still violating the law. If nothing is done, he added, “the government’s authority is undermined,” Reuters reported.

Now it’s over to the Indonesian trade ministry to figure out what to do. But if that Tokopedia partnership doesn’t solve the problem, well, $1.5 billion is a lot to spend on a failed gambit.

As for TikTok’s European troubles, enforcers of the new Digital Services Act have made TikTok the subject of their second formal investigation under the online-content law—the first involves X. The Commission’s concerns around TikTok’s addictiveness and opacity are largely to do with child safety but also relate to radicalization. TikTok’s line on this: “We’ll continue to work with experts and industry to keep young people on TikTok safe, and look forward to now having the opportunity to explain this work in detail to the Commission.” Good luck with that.

More news below—and do take a moment to savor the irony in Saudi Arabia telling top Chinese tech firms like Alibaba and SenseTime that they have to invest in the Saudi tech sector to win market-expanding deals there. “They want your company and engineers to train their own talent,” a Chinese consultant complained to the Financial Times. That definitely rings a gong.

David Meyer

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This story was originally featured on Fortune.com