Global retailer Walmart has said it will partner with technology major Microsoft to bid for US business of TikTok.
China-based internet firm ByteDance owns the short video-sharing platform, which has more than 500 million global users.
The platform is facing a ban in the US following claims that the data collected by the company from its users pose a threat to the country’s national security.
US Donald Trump administration has given 90 days to TikTok owner ByteDance to sell its US assets to an American company.
In a public statement regarding the discussions with Microsoft, Walmart said: “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 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.
“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 news follows after the California-based TikTok’s chief executive officer Kevin Mayer left the company.
The app is already banned in India, Indonesia, and Bangladesh due to allegations of illegal content.
In 2018, Walmart and Microsoft signed a five-year strategic partnership to speed-up the former’s digital transformation in retail. Microsoft serves as the retailer’s preferred and strategic cloud provider.
“Walmart knows that their average customer is getting older and they need to tap into a younger social demographic”
Producer and influencer marketing manager Marcio Delgado told Retail Insight Network that this partnership will allow Walmart to reach out to a younger demographic. Delgado said: “The retail industry is reinventing itself and, if before Covid-19 we were already seeing the high street losing customers to online shopping, moving forward any traditional way of selling products and services will rely more and more on social media.
“Besides, as a company founded in the 60s, Walmart knows that their average customer is getting older and they need to tap into a younger social demographic that a platform like TikTok already has captive.
“Data is power. Getting closer to a solid audience of 18 – 24 year olds who are eager social media users and content creators is a very strategic move now, as this consumer group is likely to buy beauty, clothes and non-essentials through a social media apps itself – and knowing their shopping, digital and entertainment habits will be a valuable asset to turn that younger audience into Walmart’s customer of tomorrow.
“I see acquiring a digital platform like TikTok as a long-term investment that can start paying dividends straight away to any business that can afford the move.”
“Walmart is interested, primarily due to the lack of competition around the purchase, but also the massive potential of TikTok”
SEO expert Buzz Carter told Retail Insight Network that Walmart is likely partnering to acquire TikTok due to lack of competition, as “the usual suspects” like Facebook and Google are currently under too much scrutiny to do so. As well as this, he noted that TikTok could provide a useful advertising platform for Walmart, especially with the younger generation.
Carter said: “First off, many people are confused about why Walmart of all companies are getting in the mix to acquire TikTok, I was too but when you remember the current issues around the usual suspects to acquire apps like Facebook and Google, they’re being scrutinised for anti-trust/monopoly issues so will be staying as far away from TikTok as they can to avoid rousing suspicious Governments.
“The fact is that TikTok is simply worth too much for Private Equity firms to realistically make a worthwhile bid, so the market to purchase TikTok is at a strange place for now, it can only really be purchased by an established valuable company, but obviously the usual suspects are under too much scrutiny to make the buy.
“So Walmart is interested, primarily due to the lack of competition around the purchase, but also the massive potential of TikTok. In the right hands, TikTok can be a massive money maker, so who wouldn’t want in on that?
“As well as the money making opportunity in TikTok, there also lies a massive advertising opportunity. As one of the most used apps in the world, it’ll surely turn into an advertisers dream as the product matures. This will give Walmart an edge in advertising on TikTok against their competition, essentially allowing them to dominate this specific medium of advertising.
“A final point to make is how Walmart can rehab their image with the next generation of consumers. As a non-American, even I know that Walmart doesn’t have the best public image, from the treatment of staff, what they sell and even the ‘people of Walmart’ have been viewed with negativity, so having the most popular app with Gen-Z in the bag, with advertising in their favour, can allow them to do some reputation management and gain favour with the next generation of shoppers.”