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Hello reader,
We all come across the law of unintended consequences from time to time and these encounters serve as great reminders of how little control we have over our lives and the world.
One of my favorite examples comes from the draft system in American sports. Basically, the pro teams that performed the worst the previous season get to choose higher up the draft order, allowing them to recruit the best collegiate players.
This system is designed to promote a more competitive (and therefore lucrative) league, as in theory, the worst pro teams will get better by signing the best college players. It does sometimes work out that way, but there are unfortunate unintended consequences.
Some teams intentionally set themselves up to lose so they can secure top upcoming college players. This can put the fans of that team in for a miserable season, which hurts the team’s (and the league’s) revenue as fan interest is down.
It’s too early to say what the consequences of Indonesia’s move to ban TikTok Shop will be. However, I think it’s fair to say that it won’t play out exactly as the country’s politicians expect it to.
Today we look at:
- How Indonesia’s TikTok Shop ban could play out
- Singaporean politician Tin Pei Ling moving into the fintech space
- Other newsy highlights such as VNG Corporation’s ongoing IPO plans and Malaysia’s MADCash getting a cash injection.
Premium summary
TikTok Shop on the chopping block
Image credit: Timmy Loen
Last week, Indonesia announced new regulations prohibiting social commerce platforms from allowing in-platform transactions and from using social media users’ data for ecommerce purposes.
The regulations have been seen as a shot across the bow of TikTok Shop, which would effectively be banned in the archipelago. The government gave it a week to comply with the new rules.
- Ill omens: TikTok Shop’s fall from grace in Indonesia has been rapid, with politicians openly criticizing the platform since July. Accusations have included alleged monopolistic practices, predatory pricing, as well as claims that algorithms favor certain sellers and that TikTok’s ecommerce arm is flooded with goods from China.
- Small sellers’ fears: TikTok has warned the new rules could affect more than 6 million sellers, many of whom run small businesses, which the regulations are supposed to protect. To some sellers, TikTok Shop is more cost-effective than other platforms because these sellers only need to focus on creating engaging content instead of worrying about advertising expenses.
- Boon for competitors: At this early stage, it seems that Shopee, Lazada, and Tokopedia stand to benefit the most from the ban. TikTok Shop had been predicted to capture 13.2% of the ecommerce market share in Southeast Asia this year, but that would be out of reach if it couldn’t operate in Indonesia.
Guess who’s back?
Quick bytes
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