Internet giant GoTo has formed a strategic partnership with social media platform TikTok to drive long-term growth for Indonesia’s micro small medium enterprises (MSME) sector as well as the country’s digital economy as a whole.
As part of the agreement, GoTo’s e-commerce subsidiary Tokopedia and TikTok Shop Indonesia’s businesses will be combined under the existing PT Tokopedia entity, in which TikTok will take a controlling stake.
The shopping features within the TikTok app in Indonesia will be operated and maintained by the enlarged entity.
TikTok has committed to invest over US$1.5 billion ($2.01 billion) in the enlarged entity over time to provide future funding required by the business, without additional dilution to GoTo. This will allow both TikTok and GoTo to each serve Indonesian consumers and MSMEs more comprehensively.
GoTo will benefit from the growth of the enlarged entity and will remain an ecosystem partner to Tokopedia, through its digital financial services via GoTo Financial and on-demand services via Gojek. GoTo will also receive an ongoing revenue stream from Tokopedia commensurate with its scale and growth.
The strategic partnership will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators.
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The transaction, which is expected to close in the first quarter of 2024, is in line with GoTo’s strategy to strengthen its financial and strategic position by growing its total addressable market.
To ensure that Tokopedia continues to operate in the best interests of Indonesia's digital economy, a committee under the enlarged entity will be established to facilitate transition and integration, chaired by GoTo group CEO Patrick Walujo, with support from members of both businesses.
In September, Indonesia prohibited social commerce companies from facilitating direct e-commerce payments on their platforms. As such, companies like TikTok would need to separate the shopping feature from its video-sharing platform.
