Walmart announces a surprise move: a joint bid with Microsoft to acquire TikTok. Really Walmart!?
Yes, Walmart. This at first seems to make literally no sense. Why would the legendary purveyor of the cheapest stuff in America want to own a wildly popular social media app? Walmart already works with Microsoft, using the Azure cloud platform company-wide, and in an emailed statement Walmart outlined this bid as a move to expand its third-party online marketplace and advertising reach. What better way to grab the attention of younger shoppers than owning the hyper-popular video platform?
The clock is ticking on who will acquire TikTok’s U.S., Canadian, Australian and New Zealand operations, as Oracle has also reached out to the owner, a Chinese internet company ByteDance to acquire . According to the New York Times, ByteDance will likely make a decision on competing bids in the next few days, and it is unclear the exact amounts discussed in bids, but sums for the potential deal range from $20 billion to $50 billion sources say.
Walmart would turn TikTok into an ecommence marketing tool and Oracle, an enterprise software company, would most likely use TikTok’s data about social interactions to enhance its cloud, data and advertising businesses. The bottom line is that any deal would cap months of drama in the US for TikTok, with the Trump administration laying it on thick to shut down the application, labeling it a national security threat and Trump signing an executive order demanding TikTok sell US operations by mid-September. TikTok is also moving quickly to sell its India operations as well, since it has been banned in that country since June.
While Microsoft and Oracle were already known to be hot contenders for TikTok, the news that Walmart was in the picture with Microsoft just emerged Thursday. Walmart is clearly trying to compete with arch-rival Amazon by seeking to expand its ecommerce, digital and entertainment business, especially crucial now in the pandemic landscape where online sales reign supreme. The news sent Walmart shares soaring, hitting a 52-week high of $139.35 on Thursday. At the close, they were up nearly 5% to $136.63, bringing the company’s market cap to almost $387 billion.
Walmart has been attempting a foray into ad-supported streaming services with a short stint with Vudu in 2018 and the acquiring Eko, a New York start-up which allows viewers to engage in “interactive storytelling” to control the plot of commercials and television episodes.
CNBC reported on Walmart’s bid Thursday morning, with Michael Lasser, a retail analyst for UBS commenting, “the lines are blurring between traditional shopping, digital shopping and social media. Connecting with a younger audience is vital to Walmart’s long-term outlook, especially as more digitally native generations move into their prime consumption years.”
The Trump administration has been in support of Oracle acquiring TikTok, Trump himself stating “I think that Oracle would be certainly somebody that could handle it.” With the current focus all on the RNC, it is not yet clear what Trump thinks about Walmart jumping into the mix of bidders.
Whoever ends up taking on the task of “fixing” TikTok will have to deal with the challenges of managing user-generated content and previous TikTok missteps in regards to content moderation, such as the incident of suppressing content from queer, disabled and overweight users, and with the large number of underage users.
We have to wonder if TikTok would still be such a trending social platform if it starts including Walmart commercials and if it will remain as appealing to younger generations when no longer under-fire from the Trump administration. Is it the dawn of a new era for TikTok or does this signal the end?