Dan Kitwood
TikTok has halted plans to roll out its e-commerce business across several markets in Europe, and instead aims to focus on growth in the U.S., where it is in a legal tussle with the U.S. government, Bloomberg News reported.
TikTok, owned by Chinese company ByteDance (BDNCE), has suspended the launch of its shopping platform TikTok Shop in Spain, Germany, Italy, France and Ireland which was expected to happen as soon as July. The company also plans to bring the Shop feature to Mexico and Brazil, the report added, citing people with knowledge of the matter.
It is not know if or when ByteDance may intend to resume the plan.
The move, which could surprise many merchants in the region, reflects ByteDance’s goal of focusing on the U.S.market and showing its value to domestic merchants and consumers. The company aims to grow U.S. merchandise volume ten times to about $17.5B this year, the report noted.
In April, U.S. President Joe Biden signed a bill into law which would force a U.S. ban on video-focused social network TikTok unless its Chinese parent ByteDance divests itself of the app within about a year. In response, TikTok and its Chinese parent ByteDance have sued the U.S. government.
The fear of a potential ban had discouraged some merchants from signing up for the new platform, according to the report.
The company’s management also thinks that a full-on European expansion could prompt a regulatory scrutiny in the EU, similar to the U.S., the report noted.
TikTok Shop’s features of interesting videos, popular influencers and full-scale commerce help it to be different from competitors such as Meta Platforms (META) Instagram and Alphabet’s (GOOG) (GOOGL), YouTube, and opens a path to take on Amazon.com (AMZN).
TikTok’s efforts are similar to ByteDance’s Douyin, the Chinese version of TikTok, which today is one of the largest Chinese e-commerce platforms. Using that model, TikTok Shop saw success in Southeast Asia before launching in the U.S. in the holiday season last year, according to the report.
Earlier today, it was reported that TikTok was working on a clone of its recommendation algorithm for U.S. users, which could result in a version that works independently of its Chinese parent. However, TikTok has denied the report.