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The e-commerce retail giant Walmart is the new player in the race for acquiring the Chinese social media platform TikTok. However, Walmart will be joining Microsoft in the bid for TikTok. Walmart sees a massive opportunity in integrating TikTok’s audience to its e-commerce retail business.
The TikTok saga continues to escalate further with every passing day. In the latest development, the American retail giant Walmart Inc (NYSE: WMT) has shown in TikTok. On Thursday, August 27, Walmart said that it will join hands with Microsoft Corporation (NASDAQ: MSFT) in the bid for TikTok.
This will be a giant leap for Walmart in the social media world. Shares of Walmart jumped 5% during the trading hours on Thursday. At the day-end, WMT stock was trading at $136 with the company’s market cap standing at $387 billion. Today in the pre-market, WMT stock is 2.47% up, trading at $140.01.
TikTok has been largely in the news over the last month after the Trump government issued an executive order on August 6. The Trump administration has threatened to ban TikTok unless some American company acquires it. The reason has been TikTok’s data collection policies which the U.S. government sees as a threat to national security.
The U.S. government has given 45 days for TikTok-parent ByteDance, to proceed through the deal or face a complete ban. The U.S. tech giant Microsoft has been talking with ByteDance to acquire TikTok’s operations in the U.S, Australia, New Zealand, and Canada. As per sources, the deal would somewhere stand between $20-$30 billion. TikTok has over 100 million active monthly users in the U.S. alone and 800 million monthly active users worldwide.
President Trump had asked Microsoft CEO Satya Nadella to consider the deal for complete acquisition for TikTok’s global operations. This would have a big deal for Microsoft as they would end up paying $50 billion for TikTok global. While Microsoft doesn’t look eager for the global acquisition of TikTok, it looks like Walmart’s entry can possibly push the deal through. Well, on the other hand, software giant Oracle has also put a bid for TikTok competing with Microsoft.
Is TikTok a Golden Opportunity for Walmart?
In a statement to CNBC, Walmart said that TikTok’s integration of e-commerce and advertising will bring “a clear benefit to creators and users in those markets”. The retail giant added:
“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.”
If the deal goes through, Walmart will certainly get access to a massive user-base. Daniel Ives, managing director and technology analyst at Wedbush Securities, calls TikTok as “a huge shot in the arm” for the e-commerce retail giant. Ives added:
“When you think right now about going up against the 800-pound gorilla, Amazon, obviously they’ve been behind the eight ball. 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.”
Ives said that with Walmart joining Microsoft, there’s an 85-90% chance of the deal going through.