In a surprising move, American multinational retail corporation Walmart has joined Microsoft to bid for the Chinese-owned video-sharing app TikTok, which has come under fire from US President Donald Trump's administration.
TikTok has gained hundreds of millions of users globally but is facing resistance due to its ties with China. While the Indian government has banned the app, the White House is pushing TikTok's Chinese owner ByteDance to sell its US business if it wants to keep operating in the country.
Walmart's decision to bid for the video app has caught quite a few off guard. While the brick-and-mortar giant isn't the likeliest candidate to own an internet app, which is wildly popular with Generation Z, a look at the retailer's ambitions shows that the decision is part of a long-term plan to attract more shoppers, advertisers and vendors.
Through TikTok, the retail giant wants to significantly expand its customer base. Walmart believes it can scale its third-party marketplace and advertising businesses by joining hands with Microsoft and acquiring the video app.
"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 to reach and serve omnichannel customers," a Walmart spokesperson told Yahoo Finance.
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"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 retailer said in a statement. Walmart's shares were up about 4.4 percent after the news broke.
Microsoft and Walmart are already business partners as Microsoft provides cloud computing services that help run the retailer's stores and online shopping. The two companies signed a 5-year partnership in 2018, in a bid to counter shared rival Amazon.
The emergence of Walmart's bid follows the resignation of TikTok's Chief Executive Officer (CEO) Kevin Mayer. After taking charge as CEO on June 1, Mayer quit TikTok less than three months on August 27, citing 'change in the political environment'.
"In recent weeks, as the political environment has sharply changed, I have done significant reflection on what the corporate structural changes will require, and what it means for the global role I signed up for. With a heavy heart that I wanted to let you all know that I have decided to leave the company," Mayer said in the letter.
In addition to Walmart and Microsoft, Oracle is also bidding for TikTok's US operations along with a coalition of investors. Backing the computer technology corporation, Trump had on August 18 said that Oracle was a great company that could handle buying TikTok.
The Trump administration is forcing a sale of TikTok's U.S. operations because of its Chinese ownership. US authorities are concerned that TikTok would turn over user data to Chinese authorities and that it censors content that would upset China.
ByteDance on August 27 said that it is moving fast to address issues related to its video-sharing platform TikTok's ban in India and the US.
Chairman of ByteDance Zhang Yiming said the company is moving quickly to find resolutions to the issues it faces globally, particularly in the US and India. "I can assure you that we are developing solutions that will be in the interest of users, creators, partners, and employees," he said.
ByteDance launched TikTok in 2017, then bought Musical.ly, a video service popular with teens in the US and Europe, and combined the two.