With this deal, GoTo’s eCommerce company Tokopedia and TikTok Shop Indonesia have combined under the PT Tokopedia entity that is now jointly owned by GoTo and TikTok, the companies said in a Wednesday (Jan. 31) press release. TikTok holds a controlling stake.
In addition, TikTok has committed to invest over $1.5 billion in this entity over time, providing the business with future funding without additional dilution to GoTo, according to the release.
Tokopedia and the TikTok Shop in Indonesia are being integrated to deliver a seamless shopping experience, the release said.
“Today marks the completion of a partnership with TikTok that will continue to bring benefits to Indonesia and its MSMEs [micro, small and medium enterprises],” GoTo Group CEO Patrick Walujo said in the release.
Stephanie Susilo, executive director of eCommerce at TikTok Indonesia, added: “We view this moment as a significant milestone in our commitment to contribute to Indonesia, its MSMEs and the growth of its digital economy alongside GoTo as a partner.”
PYMNTS reported in November that TikTok and GoTo were working on a plan to build a new eCommerce platform that would allow TikTok to revitalize its online shopping business in Indonesia, which is the largest market in Southeast Asia.
In December, PYMNTS reported that TikTok would invest $1.5 billion in Tokopedia, taking a controlling stake and salvaging its own eCommerce efforts in Indonesia.
TikTok’s takeover of an Indonesian company would enable it to deal with regulatory roadblocks. Namely, it would help it get around an Indonesian law announced in September that blocks social media platforms from handling direct payments for online purchases — a distinction that only applied to TikTok.
A takeover of Tokopedia solves TikTok’s problems in Indonesia by giving it access to Tokopedia’s large local merchant base, strong logistics and payments assets, and ties to Indonesia’s regulators and other government stakeholders, Simon Torring, co-founder of eCommerce research platform Cube Asia, told the Financial Times in December.