The drama surrounding TikTok and the way it can continue to operate in America has seen another turn with Walmart confirming they are working with Microsoft in an attempt to obtain some of TikTok’s U.S. operations, thereby avoiding the possibility of the app being banned in America.
Microsoft has been the biggest name in talks with TikTok’s owners ByteDance and are hoping to purchase the operations not just in America but also Canada, New Zealand and Australia, a deal that could be worth anywhere between $10 billion and $50 billion.
The move comes after President Donald Trump has continued to threaten a ban on the popular social media app due to ‘security fears’. Walmart confirmed they had partnered up with Microsoft in a deal that is expected to be finalized this week. Walmart had originally been in talks with investment company SoftBank to make an offer however the lack of a cloud technology component meant the consortium failed to reach an agreement. Walmart released a statement to Business Insider stating that by linking up with Microsoft they would be able to create “an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising business.”
The statement continued:
“The way TikTok has integrated e-commerce and advertising capabilities in other markets is a clear benefit to creators and users in those markets. 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.”
It is also believed that eventually Walmart could use TikTok to create sales, a theory backed up by managing director of GlobalData Retail, Neil Saunders.
“A social platform like TikTok would give Walmart easy access to the very audience it wants and needs to attract. Having a serious stake in the world of social media would not only allow Walmart to bolster its marketing efforts, it would also give it access to a rich seam of data that would help it target shoppers more effectively in terms of building campaigns, product development, and a whole host of other activities.”
Following the collapse of talks with Walmart, TikTok and SoftBank, the retail corporation decided to work with Microsoft, therefore bringing in the much needed cloud infrastructure (Azure), which TikTok would need to move from its current Google cloud service.
TikTok regularly has more than 100 million monthly active users within America – and over two billion downloads worldwide – making it one of the most sought after companies to invest in.
Following the potential ban on the app in America several companies have been linked to buying that section of the company, however the deals would not come cheap. Anyone interested in making a deal with TikTok would need big money behind them and Walmart and Microsoft have that – their market caps are $373 billion and £1.73 trillion respectively.
As well as Microsoft, Walmart and SoftBank companies including Netflix, Apple, Twitter, Oracle and Google’s parent company Alphabet have expressed an interest with Microsoft and Oracle soon becoming the most likely to make a deal. However there is still conflict between experts as to who could be the successful owner. President Donald Trump has given his verbal support to Oracle however ByteDance CEO Zhang Yiming is a former Microsoft employee, which gives the company an extra link.
Trump first made it clear that he and his administration would be removing any ties between the Chinese based company and America following allegations that the Chinese government are using American users data in a move described as a ‘risk to national security’. Although these claims have continued to be denied, with TikTok confirming that all US data is actually on servers both in America and Singapore meaning the Chinese government has no power to insist on being allowed to access it, ByteDance have been searching for a sale.
Yet Trump has continued with his claims and has issued two executive orders, the latest with a deadline of 90 days for ByteDance to sell the US operations for TikTok, a move that has seen TikTok file a lawsuit to challenge the latest order.
It appears that ByteDance are getting concerned a deal may not be made with sources revealing that the company has ordered TikTok to put together a contingency plan in case they are required to close down their operations in the U.S. The plan would also include options if any other country decided to try and block a deal as well as ‘shutdown’ contingencies. Any deal would have to be approved by both the Chinese and American governments.
TikTok’s global CEO Kevin Mayer has confirmed he will be leaving the company just three months after he took on the position. The former Disney executive listed both the upcoming acquisition as well as the struggles with the Trump administration in a letter to employees explaining his departure.