Seas plunge after Shopee faces Indonesian investigation over alleged preference for its own delivery service

Indonesia's antitrust agency is investigating Sea (NYSE: SE), which operates e-commerce platform Shopee, following allegations of unfair favoritism favoring its own delivery service over other options, Bloomberg News reported.

Sea stock fell 8% pre-market Tuesday.

Online shoppers in Indonesia can choose the company to deliver their purchases, and Shopee has established an algorithm that prioritizes its own service over other options, including its local competitors, Komisi Pengawas Persaingan Usaha, or KPPU, said on Tuesday. Indonesia, during a hearing, according to the report.

Shopee's legal team is expected to respond at a follow-up hearing on June 11.

Indonesia is a growing market for the Singapore-based company, alongside competitors such as ByteDance-owned TikTok (BDNCE) and Alibaba's Lazada (BABA).

If the allegations are proven, Shopee could face potential fines and may have to change how it presents delivery options to customers, the report notes.

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

The antitrust watchdog, as part of the submitted evidence, noted that a Shopee director had also been a senior manager of the delivery service unit since 2018.

“Based on this, PT Shopee International Indonesia discriminated in selecting shipping service companies that are automatically mass-activated on the seller dashboard,” the KPPU added, according to the report.