As TikTok continues its global expansion, its innovative "social commerce" model—blending social media with online shopping—has sparked both enthusiasm and regulatory concerns. Recent developments in Indonesia highlight growing tensions, with the country's Deputy Trade Minister proposing to separate TikTok's social media and e-commerce operations through revised licensing requirements.
Indonesia's Regulatory Push: Protecting Local Retail
The Indonesian government argues that TikTok's integrated approach gives it unfair advantages over traditional retailers, particularly through aggressive pricing strategies that threaten local businesses. This isn't isolated to Indonesia—both the United States and India have previously imposed restrictions on TikTok's operations.
The proposed regulations would treat TikTok's media functions (advertising and influencer operations) separately from its e-commerce platform (TikTok Shop), potentially disrupting the seamless user experience that has driven the platform's success. If implemented, TikTok would need to navigate complex compliance requirements to maintain its commercial operations in one of Southeast Asia's largest markets.
The Whack-a-Mole Challenge for Sellers
For cross-border e-commerce merchants, these policy shifts create an exhausting cycle of adaptation. Just as sellers adjust to one market's regulations, new requirements emerge elsewhere. The pressure to monitor multiple jurisdictions while maintaining sales performance has become a significant operational burden.
Platform policy changes frequently render previously acceptable practices non-compliant, forcing sellers accustomed to rapid growth to continually reinvent their strategies. While frustrating, most recognize this as the new normal in an increasingly regulated digital commerce landscape.
Will the U.S. Follow Indonesia's Lead?
Indonesia's regulatory moves have raised questions about potential ripple effects, particularly in the United States where TikTok Shop is currently in public testing. The U.S. market presents unique challenges, with established players like Amazon competing against emerging platforms including Temu and Shein.
Given the U.S. government's existing scrutiny of TikTok, merchants are cautiously evaluating whether to invest heavily in the platform. Many are adopting diversified approaches to avoid over-reliance on any single sales channel amid unpredictable regulatory environments.
The Path Forward: Compliance and Diversification
Facing economic headwinds, intensifying competition, and evolving regulations, cross-border sellers must move beyond price-driven strategies. Two critical priorities have emerged:
1. Regulatory Compliance: Understanding and adhering to local laws across all operating markets is no longer optional. Proactive compliance helps avoid disruptive enforcement actions.
2. Channel Diversification: Successful merchants are building presence across multiple platforms while developing direct-to-consumer capabilities through independent storefronts.
The most resilient sellers combine these operational safeguards with product differentiation and service excellence to withstand market volatility.
Broader Implications
Indonesia's actions may inspire similar regulatory approaches elsewhere, potentially complicating TikTok's global expansion. The platform may need to reconsider its integrated social commerce model in certain markets, while merchants and platforms alike face pressure to demonstrate positive local economic impact.
Looking ahead, the cross-border e-commerce sector appears headed toward greater localization, sustainability, and regulatory alignment—trends that will reshape how digital marketplaces operate worldwide.