Success Can’t Fix Everything

Since its launch in 2021, TikTok quickly became a national obsession in Indonesia, growing to over 106 million users in just three years. It wasn't just a social app—it was reshaping commerce. TikTok Shop, its in-app e-commerce platform, exploded in popularity by blending entertainment with instant purchasing power. But that success stirred up serious concerns. Regulators and small business owners accused the platform of predatory pricing practices and undermining traditional sellers.

In response, the Indonesian government issued a temporary ban on social-commerce transactions in October 2023, halting TikTok Shop operations. Unlike the U.S., where TikTok faces scrutiny over data privacy and foreign ownership, Indonesia’s concerns were rooted in economic stability, fair competition, and protecting local merchants.

To stay in the market, ByteDance—the parent company of TikTok—pivoted. In January 2024, it acquired a 75.01% controlling stake in Tokopedia, Indonesia’s top e-commerce marketplace, for $840 million. The deal was considered above market value and came with a commitment to inject at least another $1 billion into the platform. More than a business move, the acquisition was a regulatory workaround: a way to continue operating under a local banner with established licensing and infrastructure.

A year after the merger, the TikTok–Tokopedia partnership is showing signs of strain. Indonesia’s antitrust regulator initially flagged the acquisition as a potential monopoly risk, requiring ByteDance to maintain open access to payments and logistics and to file quarterly reports through 2027. Although conditional approval was granted in mid-2025, the oversight is far from relaxed.

But the bigger blow has come from the seller community. Thousands of merchants are abandoning Tokopedia, citing declining sales, lack of platform support, and frustration with the new algorithm. What used to be a straightforward e-commerce platform is now deeply integrated with TikTok’s content-driven model—forcing sellers to create video content just to be seen. Many long-time Tokopedia vendors say they feel left behind, and some are shifting to rival platforms like Shopee or new players offering zero fees to lure frustrated sellers.

To make matters worse, ByteDance has reportedly laid off 2,500 employees across its Indonesian e-commerce unit since the acquisition. For a merger that was meant to create synergy and scale, the cutbacks suggest deeper operational challenges and a failure to achieve early expectations.

Indonesia’s experience is a cautionary tale: even a wildly successful platform like TikTok can stumble when entering a tightly regulated, community-driven market. While the U.S. has focused primarily on data privacy and national security, Indonesia’s concerns—and the fallout that followed—highlight a different, but equally important lesson: when growth outpaces trust, success can quickly turn into backlash.

While the flashpoints may differ, the underlying story in both Indonesia and the U.S. is the same: TikTok’s scale has outgrown the comfort level of regulators—and even some users.

In the U.S., the concern revolves around data privacy, foreign ownership, and national security. In Indonesia, it was economic disruption, platform dominance, and threats to local businesses. But despite these different angles, the result was similar: a public and regulatory pushback once TikTok moved from entertaining users to controlling critical commerce infrastructure.

TikTok’s growth machine is unparalleled. But as the fallout in Indonesia reveals, viral attention doesn’t guarantee long-term trust—or operational stability. Especially not when platforms attempt to merge content, commerce, and control under one roof.

For U.S. business owners and investors, this isn’t just a foreign tech hiccup. It’s a case study in how success without alignment—with regulators, communities, and users—can create fragility at scale.

From the tower, this looks less like a TikTok story—and more like a universal one. Growth can be exhilarating. But in the wrong environment, it can become the beginning of unforeseen friction.

From Tokopedia’s point of view, the merger with TikTok wasn’t just a business deal—it was a survival strategy shaped by regulation.

Indonesia’s ban on social commerce in 2023 changed the playing field overnight. TikTok, unable to operate TikTok Shop independently, needed a way back in. Tokopedia, facing stiff competition from Shopee and struggling to sustain growth under parent company GoTo, found itself holding a golden ticket: the infrastructure and licensing TikTok needed to keep selling in the country.

The result? A high-premium acquisition that gave Tokopedia’s parent a fast cash infusion and offloaded operational risk. In essence, regulation created leverage. Without the government crackdown, TikTok may never have needed to buy Tokopedia—instead, it might have continued competing head-to-head.

For founders and business owners, this is a powerful reminder:

Whether you're building to sell, scale, or partner, pay attention to the policy winds. Sometimes, your competitive edge won't be product or price—but permission.

We often think of M&A as a game of market timing, synergies, and strategy. But increasingly, it’s regulation that’s writing the rules—and reshaping the outcomes.

A recent Financial Times analysis confirms what we saw play out in Indonesia: deals today are being shaped, stalled, or outright redirected by governments, not just shareholders. In the U.S., the FTC’s evolving posture and geopolitical pressures have introduced a new wave of uncertainty into cross-border M&A. Global law firms are now advising clients to price in a “regulatory premium”—a cushion for the extra time, legal expense, and restructuring required to get a deal across the line.

That’s exactly what happened in Indonesia. TikTok didn’t buy Tokopedia because it was the fastest-growing marketplace—it bought it because the government said, in effect, “You can’t play unless you play by our rules.” Tokopedia, with its licenses and infrastructure already approved by regulators, became a shortcut TikTok couldn’t afford to ignore. The $840 million deal wasn’t just about tech or traffic—it was a government-forced workaround, and it came with all the post-acquisition friction you’d expect from a deal made under pressure.

From the tower, here’s the big idea: regulators are no longer the referee—they’re often the deciding player on the field. If you’re building a business in a regulated space or a strategic sector, your ability to attract a premium acquisition may have less to do with growth—and more to do with permission.

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