Walmart confirmed it’s teaming up with Microsoft in a bid for TikTok.
Walmart announced plans to Teams up with Microsoft to purchase TikTok’s U.S., Canada, Australia, and New Zealand operations in a deal that’s likely to be in the $20 billion to $30 billion range.
Through an official statement, Walmart said TikTok’s integration of e-commerce and advertising “is a clear benefit to creators and users in those markets” at a time it hopes to unseat rival Amazon Prime. The company, however, did not say how it would use TikTok or whether it would be part of Walmart+. “We believe a potential relationship with TikTok US in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses,” the statement read. “We are confident that a Walmart and Microsoft partnership would meet both the expectations of US TikTok users while satisfying the concerns of US government regulators.” The Trump administration forced TikTok’s Chinese owners to sell the video app to a U.S. company over national security concerns.
According to CNBC, Walmart spokesman Randy Hargrove declined to say how the two companies would split ownership of TikTok, if they had the winning bid, and whether the retailer would be the majority owner. The retail giant is pursuing the acquisition at a time when it’s trying to better compete with Amazon. It plans to launch a membership program, called Walmart+, soon. The subscription-based service is the retailer’s answer to Amazon Prime, which includes original TV shows and movies. If approved, the deal would give Walmart and Microsoft access to hundreds of millions of consumers who could buy their products or become a lucrative audience for ads. In a filing this week, TikTok said it has nearly 100 million monthly active U.S. users. That’s up nearly 800% from January 2018.
“When you think right now about going up against the 800-pound gorilla, Amazon, obviously they’ve been behind the eight ball,” said Daniel Ives, managing director and technology analyst at Wedbush Securities. “But Walmart could use this as a golden opportunity to partner with Microsoft and monetize the TikTok base, which could start to rival Instagram in the next few years just given its global presence.”
A decision from TikTok will reportedly arrive “in the coming days” as U.S. operations are entering its final stages, with another group having submitted bid, but it’ll be without CEO Kevin Mayer, who resigned abruptly.