Walmart Joins Microsoft's Pursuit of TikTok
August 27 2020 - 2:10PM
Dow Jones News
By Sarah Nassauer and Georgia Wells
Walmart Inc. said it is joining Microsoft Corp.'s pursuit of
TikTok's U.S. operations, throwing a curveball into the chase for
the popular short video-sharing app.
The Trump administration has pushed TikTok's owner, Chinese
technology giant ByteDance Ltd., to sell its American operations
after targeting the app over national-security concerns.
Microsoft's bid is considered the front-runner, according to
people familiar with the matter, while a second consortium
including Oracle Corp. also remains in the running.
Google parent Alphabet Inc. was also involved in talks as
recently as earlier this week, according to people familiar with
the matter. Those talks are now dead. Another bid involving Twitter
Inc. has also lost momentum, according to some of the people.
The discussions broadly are gaining momentum and a deal could be
reached within a week, according to people familiar with the
matter.
Walmart's entry into the mix was a surprise even to many people
close to the deal talks, and it wasn't immediately clear how a
partnership with Microsoft might be structured.
Walmart said it believes a potential partnership with Microsoft
would address U.S. government concerns about TikTok. Unlike big
tech companies that have been in the Trump administration's
crosshairs, Walmart has close ties to the White House.
The retailer's chief executive, Doug McMillon, has traveled to
the White House on several occasions, and President Trump has
praised Walmart and other big chains for helping with Covid-19
testing efforts during the pandemic.
Walmart and Microsoft are already partners on several technology
projects, with the retailer using Microsoft's cloud computing
services, as they seek a counterweight to Amazon.com Inc.
"The way TikTok has integrated e-commerce and advertising
capabilities in other markets is a clear benefit to creators and
users in those markets," Walmart said in a statement. CNBC earlier
reported on Walmart's role in the discussions.
"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," Walmart's statement said.
Microsoft declined to comment but has previously said it was
pursuing a deal for TikTok's U.S. operations and might invite other
American investors.
Walmart's shares jumped 6% on the news in Thursday afternoon
trading to record highs, approaching a $400 billion market
capitalization. The stock price has rallied this year as the
big-box retailer has managed to operate throughout the pandemic.
Demand from shoppers looking for groceries and household staples
has led to surging sales and a jump in e-commerce revenue.
The world's biggest retailer by revenue has been ramping up its
online business in recent years, paying $3.3 billion to acquire
Jet.com in 2016 and striking a $16 billion deal two years later for
a controlling stake in Flipkart, an Indian e-commerce company.
But Walmart, like Amazon, has also looked to move beyond its
retail roots, by developing an online marketplace to sell a wider
range of products from third-party sellers and smaller merchants.
It has also sought to create its own digital advertising network.
The company aims to use those services to generate new revenue
streams beyond its supercenters, which currently account for most
of its more than $500 billion in annual revenue.
Until now, Walmart has mostly used social media to advertise
products. But the company has also begun to offer its own digital
ad space and access to shopper data, mainly to its existing
suppliers. An ownership stake in TikTok could allow Walmart to use
the video platform to sell ads to its suppliers -- and potentially
to sell its own products through the app.
TikTok, an app that shot to popularity with its videos of
dancing and lip-syncing teenagers, has been downloaded more than
two billion times since its launch, according to mobile-data
research firm Sensor Tower.
As talks of a potential deal have heated up, TikTok CEO Kevin
Mayer said this week that he is leaving. The former Walt Disney Co.
executive had been on the job for about three months.
--Liza Lin and Rob Copeland contributed to this article.
Write to Sarah Nassauer at sarah.nassauer@wsj.com and Georgia
Wells at Georgia.Wells@wsj.com
(END) Dow Jones Newswires
August 27, 2020 13:55 ET (17:55 GMT)
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