ByteDance wields the "big knife" of layoffs to its e-commerce business in Indonesia.

According to the report, the e-commerce department involved in the layoff is Tokopedia, the local e-commerce business acquired by ByteDance in January this year, which is also the first layoff after ByteDance acquisition.

According to insiders, it is expected that the scope of layoffs will be around 450 people, accounting for about 9% of the total number of employees in the department, and will start as early as this month. The final number is still under discussion and may fluctuate with changes in the situation.

Tokopedia is the e-commerce department of GoTo, an Indonesian technology giant. At the beginning of this year, ByteDance spent 1.5 billion dollars to win it. According to the agreement, Tokopedia will merge its Indonesian business with TikTok Shop under ByteDance into the existing Tokopedia entity, and TikTok holds 75% of the shares.

The agreement also mentions that TikTok promises to invest over $1.5 billion in the merged entity over time to provide the necessary funds for future business without further dilution of GoTo.

At the same time, GoTo will also benefit from the growth of Tokopedia's integrated business, achieving a sustained revenue stream commensurate with its scale and growth, and will continue to serve as Tokopedia's ecological partner, supporting GoTo Financial's digital financial services and Gojek's on-demand services.

On the surface of the protocol, compared with GoTo, ByteDance seems to be the loser. In this case, why sign such an agreement when ByteDance? For ByteDance, the acquisition of Tokopedia is a necessary step.

Last September, the Indonesian government introduced new regulations prohibiting direct e-commerce activities on social media in the country, forcing social media operators such as TikTok to separate their shopping functions from video sharing platforms. This also caused the ambitious TikTok Shop to shut down instantly. Last October, TikTok was forced to close its online store in Indonesia, losing its second largest global market after the United States and suffering a significant blow.

The acquisition of Tokopedia is the helpless act of ByteDance to restart TikTok's online shopping business in Indonesia in order to solve regulatory obstacles. It is understood that after the transaction is completed, TikTok will only exist as a social media platform, while Tokopedia will be responsible for managing the shopping function.

This layoff shows that ByteDance is carrying out a comprehensive reform of its Indonesian e-commerce business and seeking to cut costs.

After the merger of TikTok Shop and Tokopedia, ByteDance has about 5,000 employees in Indonesia's e-commerce business department. People familiar with the matter said that ByteDance was cutting employees in e-commerce teams, including advertising and operations, partly to reduce the number of jobs with duplicate functions.

Indonesia is one of the most important markets for ByteDance e-commerce business. It is reported that the e-commerce market in Indonesia is currently dominated by Tokopedia, Shopee, Lazada and other platforms, and the latter two belong to Sea Ltd., a Singaporean enterprise, and Alibaba Group, another Chinese Internet enterprise.