Indonesia’s antitrust agency has expressed concerns about a potential monopoly following TikTok’s acquisition of a majority stake in Tokopedia, the country’s largest ecommerce platform.

TikTok finalized the purchase of a 75.01% stake in Tokopedia for US$840 million in January 2024.

The deal, agreed upon in December 2023, involved acquiring shares from GoTo.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Indonesia’s rapid ecommerce growth attracts increasing regulatory scrutiny

Indonesia’s antitrust concerns about TikTok-Tokopedia come amid extraordinary market growth, with the country’s ecommerce sector projected to reach $46.6 billion by 2025, up from $18.2 billion in 20201.

This represents a compound annual growth rate of 22.3% between 2020-2024, making it one of Southeast Asia’s fastest-growing digital markets2.

The government has been increasingly active in regulating the sector to protect local businesses while supporting the digital economy, with the TikTok-Tokopedia deal representing a key test case for this balancing act.

The regulatory concerns reflect Indonesia’s strategic approach to foreign investment in its digital economy, as officials attempt to nurture local champions while allowing enough competition to drive innovation.

Tokopedia’s market penetration, serving 93% of Indonesia’s districts across its 17,000 islands, highlights why regulators are concerned about potential market concentration3.

2️⃣ Tokopedia’s valuation journey reflects changing investor sentiment

TikTok’s acquisition of a 75.01% stake in Tokopedia for $840 million represents a significant valuation decline from Tokopedia’s earlier fundraising rounds.

In 2018, Tokopedia raised $1.1 billion in a round led by SoftBank and Alibaba that valued the company at approximately $7 billion—over eight times higher than the implied valuation in the TikTok deal3.

This valuation compression occurred despite Tokopedia’s continued growth to over 100 million monthly active users and 9.7 million merchants by 2020, suggesting changing investor sentiment about ecommerce unit economics in emerging markets4.

The shift reflects broader challenges in the Southeast Asian tech ecosystem, where many companies that achieved unicorn status during the funding boom have struggled to maintain those valuations in a more constrained investment environment.