By Stanley Widianto and Fanny Potkin
JAKARTA - TikTok and YouTube are considering joining Meta in applying for e-commerce licenses in Indonesia after Southeast Asia's largest economy banned online shopping on social media platforms, people familiar with the discussions said.
Indonesia's trade ministry banned e-commerce transactions on social media a month ago, saying it sought to protect small and midsize offline merchants and marketplaces, and to ensure users' data was protected.
With a population of more than 270 million, Indonesia generated nearly $52 billion in e-commerce transactions last year, according to data from consultancy Momentum Works.
The law was a particular blow to TikTok, which had pledged in June to invest billions of dollars in Southeast Asia, mainly in Indonesia where it has a base of 125 million users, in a major push to build its e-commerce service TikTok Shop.
The app, owned by Chinese technology giant Bytedance, plans to apply for an e-commerce license and is exploring the best path to do so, three people familiar with the matter told Reuters.
TikTok is holding talks for potential partnerships with local e-commerce players, including GoTo's Tokopedia, while building a standalone TikTok Shop app for Indonesia, the people said.
Until TikTok Shop stopped operations in Indonesia this month, it was delivering about 3 million parcels a day in Indonesia, two sources said.
TikTok said it could neither confirm nor deny it was considering seeking a license. Tokopedia did not immediately respond to requests for comment.
Alphabet (NASDAQ:GOOGL)'s YouTube is also planning to apply for an e-commerce license, two sources said, without specifying the type of permit planned. YouTube introduced in the U.S. a shopping service for creators to promote products and brands on the platform.
A spokesperson for the company declined to comment.
TikTok and YouTube's plans to apply for e-commerce permits in Indonesia have not been previously reported.
Facebook (NASDAQ:META) and Instagram owner Meta Platforms applied this month for a type of e-commerce license allowing the promotion of goods on its platforms but no direct e-commerce transactions, said the Indonesian trade ministry's director general of domestic trade, Isy Karim.
The permit would enable vendors to advertise goods and do market surveys but no in-app transactions, Isy said, adding that Meta is seeking the permit for its Facebook, WhatsApp and Instagram apps.
Meta did not respond to requests for comment.
YouTube and TikTok have not approached authorities about applying, Isy said. If TikTok were to apply, he said, it would have to be a domestic unit of the company.