What is the price of doing business for TikTok?

• Indonesia’s ban is only the latest addition to the list of TikTok’s troubles.
• ByteDance’s revenue surged more than 30% to surpass US$80 billion in 2022.

Article by Nathan Hew

The worst is far from over for TikTok, as Indonesia becomes the first Southeast Asian nation to take a stand against the ByteDance-owned platform — making it the latest addition to the list of TikTok ban countries.

In a move that takes effect immediately, Indonesia Trade Minister Zulkifli Hasan told reporters last Wednesday that the country will ban e-commerce transactions on social media platforms to protect offline merchants and marketplaces, adding that predatory pricing platforms have threatened small and medium-sized enterprises. He added that the regulations were in place to ensure “fair and just” business competition as well as protecting users’ data.

The ban comes as a major blow to TikTok since it intends to invest billions of dollars in Southeast Asia, mainly in Indonesia, over the next few years as the Chinese company plans to build its e-commerce platform, TikTok Shop, which launched in 2021.

Indonesia is one of the world’s biggest markets for TikTok Shop and was the first to pilot the app’s e-commerce arm. The country is home to an estimated 125 million users, according to company figures, including 2m small businesses on TikTok Shop.

TikTok ban countries: Why have many banned this social media platform?

India banned the platform in mid-2020 after a geopolitical dispute with China, costing ByteDance one of its biggest markets, as the government cracked down on 59 Chinese-owned apps. India cited a law that allowed it to block websites and apps in the interests of the country’s “sovereignty and integrity.”

Countries and government bodies — including Britain and its parliament, Australia, Canada, the executive arm of the European Union, France, and New Zealand’s parliament — have banned the app from official devices.

The Bytedance-owned platform was fined roughly US$370 million by European Union (EU) regulators in September for having weak safeguards to protect the personal information of children using the app.

Ireland’s Data Protection Commission, which issued the penalty on behalf of the EU, reported that TikTok’s default setting did not properly protect children’s privacy, nor was the company transparent in explaining what it was doing with data of users aged 17 and younger. The fine is the first one issued against TikTok by the 27-nation bloc for violating data protection laws.

Similarly, TikTok was fined £12.7 million by UK privacy regulators for failing to protect children’s data. According to the UK’s Information Commissioner’s Office (ICO), the Chinese company allowed 1.4 million children under 13 to use the app in 2020, despite its own rules requiring users to be above this age to create a TikTok account.

What is the price of doing business for TikTok?

ByteDance’s revenue surged more than 30% to surpass US$80 billion in 2022, matching arch-rival Tencent Holding after twin video platforms TikTok and Douyin drew eyeballs and advertisers, South China Morning Post reported.

Its report also revealed that an anonymous source shared that the world’s most valuable private tech firm told its investors in a memo that revenue surged from around US$60 billion in 2021. This double-digit growth topped most global internet leaders, including Meta Platforms and Amazon.com.

Then, there’s the maximum limit of fines that regulators can impose. For instance, the maximum fine ICO in the UK can issue is £17.5 million or 4% of the total annual worldwide turnover in the preceding financial year, whichever is higher. Regardless, these fines are a drop in the ocean compared to TikTok’s global revenue.

Business of Apps data shows that TikTok had 1.7 billion monthly active users in 2023 and the company is predicted to reach two billion by the end of 2024.

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