January 29, 2024
JAKARTA – GoTo CEO Patrick Walujo has dismissed allegations that the government’s recent curbing of TikTok’s operations in Indonesia was a collusive act intended to compel the Chinese short-video platform to strike a deal with the Indonesian tech giant’s e-commerce arm, Tokopedia.
“People say it was a conspiracy between the government and GoTo and that banning [TikTok] created an opportunity for us. That’s utter nonsense,” Patrick told the audience during a panel discussion at a DealStreetAsia event in Jakarta on Thursday.
There had been a time when every major player in the country, not just GoTo, had been actively wooing the ByteDance subsidiary, Patrick said.
“We worked and negotiated really hard for the result,” he added.
In December 2023, TikTok agreed to pay US$1.5 billion for a 75.01 percent stake in Tokopedia, while Tokopedia’s parent company GoTo would retain the remaining 24.99 percent.
Read also: TikTok marks e-commerce return with $1.5 billion deal to acquire Tokopedia
While some observers raised concerns about GoTo being left with a minority stake, Patrick claimed the deal was a strategic maneuver to address competency gaps and propel the e-commerce business toward profitability.
If it were not for the deal, Tokopedia would have gone through a “slow death in the end”, said Patrick, who is also the CEO of Singaporean private equity firm Northstar Group, one of GoTo’s initial backers.
Some experts have described the deal as highly advantageous for TikTok and have said GoTo’s minority stake could constrain its ability to leverage the e-commerce platform going forward, The Jakarta Post previously reported.
“These talents all are in China,” he said, citing TikTok’s exposure to the ecosystem of global giants like Alibaba and China’s Pinduoduo.
Prior to the TikTok deal, the firm had brought in Chinese tech talent, Patrick said, but the process proved slow and arduous. He viewed the new partnership as a crucial step toward acquiring the expertise he deemed necessary to conquer the country’s e-commerce market.
“Initially, the intent was to find somebody who could help them connect to the market in a very simple way,” Patrick said. “But now, partnering with [Tiktok] appears as an opportunity.”
“Together, we will become the number one e-commerce player in the market. This is the promise I made with the Tokopedia team in the first town hall meeting,” he added.
Tokopedia and Tiktok Shop’s consolidation is expected to be completed in the first quarter of this year.
TikTok’s investment will go directly to Tokopedia, according to GoTo’s disclosure, while GoTo will receive dividends from the collaboration and get a boost in its earnings before interest, taxes, depreciation and amortization (EBITDA).
GoTo will receive a service fee of about 0.4 percent levied on TikTok and Tokopedia’s combined gross merchandise value (GMV), according to GoTo’s investor update report released on Thursday.
The report suggests that if the GMV of TikTok Shop and Tokopedia were to reach $2.9 billion in a certain quarter, GoTo would earn a service fee of $11.4 million for that quarter.
The fees are to be paid by Tokopedia on a quarterly basis.