Indonesia says e-commerce leader Sea unfairly favored its own delivery service

JAKARTA – Indonesia’s antitrust regulator is investigating Southeast Asia’s e-commerce leader Sea for potentially unfairly favoring its own delivery service over other alternatives.

Online shoppers in Indonesia can choose which company will deliver their purchases, and Sea’s e-commerce arm, Shopee, has developed an algorithm that favors its own service over other options, including local competitors, antitrust watchdog KPPU said at a hearing on May 28.

Shopee’s legal team, which was present at the event, is scheduled to respond at the next hearing on June 11.

Indonesia, with a population of about 280 million, is a key growth market for Singapore-based Sea, as well as its competitors such as ByteDance’s TikTok and Alibaba Group Holding’s Lazada.

If proven to have violated the rules, Shopee will face potential penalties and may need to change the way it presents delivery options to consumers.

Shopee “is committed to complying with all applicable laws and legislation in the Republic of Indonesia,” a Shopee Indonesia spokesperson said.

In supporting evidence, KPPU said that as of 2018, the Shopee executive also served as a top official in its delivery services division.

“On this basis, PT Shopee International Indonesia discriminated in the selection of companies providing shipping services that are automatically activated collectively on the seller’s panel,” the antitrust authority said in a statement.

The agency is also investigating Lazada.

The antitrust fines that Indonesian authorities could impose on Alibaba’s Lazada if found in violation of the law would be lower than the possible fines imposed on Sea’s Shopee, which has four times as many monthly active users in Indonesia.

Less than a third of Lazada’s monthly active users were in Indonesia, compared with almost half for Shopee as of April 30, based on Sensor Tower data. BLOOMBERG