When Indonesia moved to separate social media from online retail, it did more than clip one company’s wings. It threw millions of sellers, affiliates and small merchants into a hurried search for new ways to reach customers. What looked like a platform regulation on paper quickly became a shock to everyday livelihoods.
The rule was simple, the disruption was not
In late September 2023, Indonesia’s trade authorities said social platforms such as TikTok, Facebook and Instagram could promote goods but could no longer process direct sales and payments inside the same app. Officials argued that social commerce had been undercutting physical shops and distorting competition.
The government’s hope was that shoppers would return to brick-and-mortar businesses and more formal e-commerce channels. But the transition hit a market where social selling had already become normal. Researchers cited by Rest of World said roughly 64% of Indonesia’s small and medium-sized businesses sold directly through social media, while far fewer relied on dedicated e-commerce websites.
Millions were already inside the system
TikTok said it had more than 6 million sellers and 7 million affiliate creators in Indonesia. That scale helps explain why the change felt less like a policy tweak than a sudden market rewrite. For some merchants, livestream selling had become their main route to customers. For resellers and affiliates, it had turned phones and short videos into a full-time income stream.
The policy debate in Indonesia was real. Critics argued that social commerce allowed sellers to dodge rules that offline and conventional online retailers had to follow, including taxes, certification and other compliance costs. But even people who wanted tighter regulation warned that abruptly switching off direct in-app selling could hit the very small businesses the government said it wanted to protect.
A preview of how governments may regulate platform economies
Indonesia’s move mattered far beyond one market because it showed a government drawing a hard line between influence and transaction. In countries where platforms increasingly act as storefronts, payment systems, advertising channels and entertainment venues all at once, regulators are still deciding where one activity ends and another begins.
For Indonesian sellers, that abstract question turned into an immediate practical one: where do customers go now? Some could migrate to other marketplaces. Others could try direct messages, affiliate links or hybrid models. But for many people who had built businesses around social shopping, the shutdown was a reminder that entire digital livelihoods can hinge on how one ministry defines the boundary between media and commerce.
