Indonesia’s antitrust agency KPPU has granted conditional approval for TikTok’s acquisition of Tokopedia, the country’s largest ecommerce platform.

This decision follows an investigation into potential monopoly risks associated with the US$840 million deal, which was finalized in January 2024.

TikTok acquired a 75.01% stake in Tokopedia from GoTo.

KPPU’s approval is dependent on compliance with specific requirements, including maintaining open payment and logistics methods and avoiding predatory pricing practices.

The agency’s investigation identified concerns about increased market concentration and potential price hikes.

KPPU said it will monitor compliance with these conditions until June 17, 2027.

A spokesperson for TikTok said the company respects the decision and is committed to fair competition principles. Tokopedia has not yet provided a comment on the approval.

.source-ref{font-size:0.85em;color:#666;display:block;margin-top:1em;}a.ask-tia-citation-link:hover{color:#11628d !important;background:#e9f6f5 !important;border-color:#11628d !important;text-decoration:none !important;}@media only screen and (min-width:768px){a.ask-tia-citation-link{font-size:11px !important;}}

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Indonesia strengthens regulatory oversight in rapidly evolving digital markets

The conditional approval of the TikTok-Tokopedia deal reflects Indonesia’s increasingly assertive approach to regulating tech companies, consistent with global trends of heightened scrutiny.

The KPPU’s conditions for approval, including guaranteed open methods for payment and logistics, address specific concerns about potential market dominance in Indonesia’s digital economy 1.

This is part of a broader pattern of enforcement, evidenced by Indonesia’s recent $12.4 million fine against Google for alleged unfair business practices related to its app store and payment systems 2.

Indonesia’s competition law provides significant enforcement powers, with potential sanctions including fines of up to 50% of net profits or 10% of turnover for companies found to be engaging in anticompetitive practices 1.

The three-year monitoring period until June 2027 demonstrates how Indonesia is developing longer-term regulatory oversight mechanisms specifically tailored to digital markets.

2️⃣ TikTok’s acquisition signals intensifying competition in Southeast Asia’s e-commerce battleground

The $840 million acquisition combines ByteDance’s rapidly growing TikTok Shop with Indonesia’s largest e-commerce platform in the region’s biggest market, where Indonesia contributes 46.9% of Southeast Asia’s total e-commerce GMV 3.

TikTok Shop has already demonstrated explosive growth, achieving a GMV of $16.3 billion in 2023—four times higher than the previous year—making this acquisition particularly significant for market dynamics 3.

The combined entity will compete in a market projected to triple to approximately $230 billion by 2026, with current e-commerce penetration at only 20% compared to China’s 47%, indicating substantial growth potential 4.

The KPPU’s concerns about “significant increase in market concentration and the possibility of post-acquisition price increases” highlight the potential market power of the combined TikTok-Tokopedia platform in a rapidly consolidating sector.

3️⃣ Conditional approvals reshape the relationship between regulators and tech platforms

The KPPU’s prohibition of predatory pricing as a condition for approval directly addresses concerns about how large platforms with significant capital backing can distort competition 1.

This regulatory approach represents an evolution in how competition authorities manage digital markets, moving from simple approval/rejection to ongoing oversight with specific behavioral conditions.

The requirement for open payment and logistics methods reflects regulators’ growing understanding of how control over these critical infrastructure elements can create competitive advantages beyond mere market share 5.

Indonesia’s approach mirrors global regulatory trends, as the KPPU has increased its focus on digital markets, launching investigations into potential abuses of dominance by tech companies 1.

The conditional approval creates a framework for accountability that acknowledges both the economic benefits of the merger and the potential risks to fair competition in Indonesia’s digital economy.

……