ByteDance’s TikTok will take a 75.01% controlling stake in a joint venture entity formed in partnership with GoTo’s e-commerce unit Tokopedia, the two tech firms announced on Monday.
TikTok will invest $1.5 billion in the combined entity over time “to provide future funding required by the business, without any additional dilution to GoTo’s 24.99% stake,” the companies said.
As part of the transaction, Tokopedia will first acquire TikTok Shop’s Indonesia business for $340 million in the fourth quarter of this year, according to GoTo’s investor note. TikTok will then acquire the majority stake in the entity. The overall transaction is expected to close in the first quarter of 2024.
The strategic partnership deal will allow TikTok to run its online shopping features again via TikTok’s social media app in Indonesia. The development comes roughly two months after Jakarta banned direct payments for online purchases on social media platforms to protect smaller local merchants and users’ data. TikTok suspended its e-commerce service on 4 October to comply with the new rule in the country, which was one of the promising e-commerce markets for the Chinese tech firm.
The ByteDance-owned short video app launched TikTok Shop Indonesia in 2021 and had around 106 million users in Indonesia as of October, which came in second after the U.S. Indonesia is the third biggest market in Asia, only behind China and India in terms of the number of active social media users at 167 million, with 60.4% of the total population using these platforms.
“Going forward, TikTok, Tokopedia and GoTo will transform Indonesia’s e-commerce sector, creating millions of new job opportunities over the next five years,” the two companies said in a joint statement. “More than 90 percent of the combined business’s merchants are MSMEs and the companies will undertake a series of joint initiatives to support them.”
Financial Times reported earlier this month that TikTok was in advanced talks to invest in GoTo’s e-commerce unit, Tokopedia, hoping to relaunch its shopping business.