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Now, Walmart is also interested in TikTok's US assets - we tell you why

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Quick question. Is there any big US company that is not interested in taking over the assets of TikTok? First we had Microsoft. Then Twitter was rumoured to be keen. Oracle was thrown into the mix later. In distant India, Jio Platforms' name was floated. And before we forget the names of Google and Netflix were also bandied around. And now we have Walmart, which seems to have taken a liking to TikTok's integration of e-commerce and advertising capabilities in other markets.

But Walmart is not bidding on its own. It is joining forces with Microsoft. 

Walmart is seeing this as a way for it to expand its advertising business and grow its third-party marketplace.

"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," a Walmart spokesperson was quoted as saying.

Walmart and Microsoft, if the deal clicks, are hoping to get access to hundreds of millions of consumers who could buy their products or become a lucrative audience for ads. For, TikTok has nearly 100 million monthly active users in the US.

But why is Walmart interested in a video company?

Walmart being in the race for a video platform may be intriguing for many.

Walmart Chief Executive Officer Doug McMillon wants to move his company well beyond its brick-and-mortar roots. Ever since he took over in 2014, McMillon has been talking about this. And a deal that involves TikTok would enhance Walmart’s third-party marketplace and advertising businesses, which in the current scheme of things provide larger profit margins than selling Pepsi and Pringles.

TikTok, with its user base of large, young and loyal youngsters --- exactly the kind that the ad industry focuses on --- can help Walmart wean marketing budgets from Google, Facebook and Amazon over to its in-house media arm.

Walmart, riding on TikTok's basem can reach customers across virtual and physical sales channels and grow its online marketplace and its advertising business.

About 265 million people shop at a Walmart store or on its website each week. It’s set to launch a new subscription service dubbed Walmart+, for which it would need to more about its customers.

Ergo, a platform like TikTok that can help glean info about its users.

For the record, Walmart and Microsoft had earlier teamed up to take on Amazon a couple of years ago.

TikTok in turmoil

Just hours before Walmart's plan emerged, TikTok's CEO Kevin Mayer quit just three months after joining TikTok. As it happened, he was in the middle of negotiations to sell the ByteDance-owned short-form video app's US operations to Microsoft or Oracle.

TikTok is under fire  for being a potential national security risk due to the vast amount of private data the app is compiling on US consumers.

ByteDance founder and CEO Zhang Yiming has been quoted as saying that his company was "moving quickly to find resolutions to the issues that we face globally, particularly in the US and India".

ByteDance has been in talks to sell TikTok's North American, Australian and New Zealand operations which could be worth $25 billion to $30 billion.

TikTok is expected to finalise a deal in a couple of days.

Date

28 Aug 2020

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