Tiktok shifts focus to Southeast Asia amid global scrutiny over data security concerns

TikTok's parent company ByteDance said it would invest billions of dollars in Southeast Asia over the next few years to expand its market. The development comes amid a global scrutiny of the company over data security.

Why Southeast Asia is important for ByteDance?

Southeast Asia is a region with a collective population of 630 million. About half of them areunder the age of 30, the target age of Bytedance-owned TikTok.

Southeast Asia is also one of TikTok's biggest markets in terms of user numbers, generating more than 325 million visitors to the app every month.

Meanwhile, the Shenzen-headquartered platform continues to struggle to translate its large user base into a major e-commerce revenue source. It faces fierce competition from Sea's Shopee, Alibaba's Lazada and GoTo's Tokopedia.

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"We are going to invest billions of dollars in Indonesia and Southeast Asia over the next few years," TikTok CEO Shou Zi Chew said at a forum it organised in Jakarta to highlight the social and economic impact of the app in the region.

The platform, however, did not provide how will it spend the money. It said that it would invest in training, advertising and supporting small vendors looking to join its e-commerce platform TikTok Shop.

TikTok's quest to get e-commerce right in Southeast Asia

Chew said content on its platform was becoming more diversified as it adds more users and expands beyond advertising into e-commerce, allowing consumers to purchase goods through links on the app during live streaming.

TikTok has 8,000 employees in Southeast Asia, and twomillion small vendors selling their wares on its platform in Indonesia, the region's biggest economy, he added.

According to data from consultancy Momentum Works, e-commerce transactions across Southeast Asiareached nearly $100 billion last year, with Indonesia accounting for $52 billion.

TikTok facilitated $4.4 billion of transactions across Southeast Asia last year, up from $600 million in 2021, but it still trailed far behind Shopee's $48 billion of regional merchandise sales in 2022, Momentum Works.

Data security concerns and app bans

The investment plan comes as the company continues toface major scrutiny from governments and regulators worldwide because of concerns that the Chinese Communist Party could use the app to harvest user data to advance its interests.

Countries including Britain and New Zealand have banned the app on government phones. India, in 2020, banned the application citing data security concerns.

TikTok hasdenied that it has ever shared data with the Chinese government and has said the company would not do so if asked, Reuters has reported in the past.

The app has not faced major bans on government devices in Southeast Asia. But it remains under scrutiny over its content.

Indonesia presented one of its first major global policy challenges in 2018 after authorities briefly banned TikTok for posts they said contained "pornography, inappropriate content and blasphemy".

In Vietnam, regulators said it would probe TikTok's operations in the country because "toxic" content on the platform poses a threat to its "youth, culture and tradition".

(With inputs from agencies)

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