Antitrust regulators in Indonesia are investigating whether Sea Limited unfairly favored its own delivery services for orders placed on its Shopee e-commerce platform. U.S.-listed Sea stock, which has surged to big gains this year, fell Tuesday on the news.
Indonesia's antitrust watchdog, KPPU, announced the probe on Tuesday. Shoppers in Indonesia can choose which company delivers their purchase and Indonesian officials say that Sea set up an algorithm that prioritized its own service over other options, according to a Bloomberg report. Shopee is scheduled to respond at a hearing on June 11. Shopee could face fines or be required to make other changes if found to have violated the rules, according to the report.
A Sea official told Bloomberg that Shopee is "committed to complying with all applicable regulations and legislation in the Republic of Indonesia."
Lazada, the local e-commerce arm of Chinese tech giant Alibaba, is also part of the investigation, according to the Bloomberg report.
On the stock market today, Sea stock lost 3.2% to close at 69.70. Shares hovered around Sea stock's 21-day moving average for much of the day before closing above it, according to MarketSurge.
Sea Stock: Up More Than 80% This Year
After a bumpy 2023, Sea stock has surged out to a more than 80% gain in the first five months of the year. Shares of the Singapore-based internet services company have been helped by the perception it is fending off China-based e-commerce challengers such as Alibaba and PDD Holdings in its key markets, which includes Indonesia. TikTok's China-based parent company ByteDance is also a competitor in Indonesia.
Earlier this month, Sea stock gained after the firm posted better-than-expected sales its March-ending first quarter.
Shopee is Sea's largest business. The company's total e-commerce revenue advanced 33% year over year in the first quarter to $2.7 billion. E-commerce revenue grew 23% year over year in the December quarter.
Shopee services Southeast Asia and Taiwan. Sea also owns digital-payments provider SeaMoney and Garena, a global online games developer.
