Walmart partners with Microsoft on bid for TikTok

Retail giant Walmart is partnering with tech giant Microsoft on a bid for the Chinese-owned video app known as TikTok. The news was first reported Thursday (Aug. 27) by CNBC.

It’s unclear if the joint bid is a 50/50 deal or if one company will have a larger stake. It’s not the first time the two businesses have partnered. They each own a stake in Indian retail/tech/logistics startup Flipkart. Walmart is the majority stakeholder in Flipkart, but Microsoft has a minority interest.

Walmart’s interest in TikTok comes as the retailer continues to focus on growing its advertising business. TikTok has been a business headline for weeks as the Trump administration has said it will shut down the foreign-owned enterprise unless it is sold to a U.S. company by mid-November.

“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,” Walmart said in a statement.

Walmart also said it believes the joint bid would satisfy the Trump administration, meet the expectations of TikTok users and pass regulatory scrutiny.

“The biggest implication I see is the value of influencers for product promotion,” said Keith Anderson, senior executive over strategy at Profitero, an e-commerce analytics firm. “Perhaps there’s some ancillary revenue for Walmart in it also, but I would imagine Walmart’s biggest interest is in getting ownership/influence over a highly influential form of visual content that drives purchases among younger shoppers — would be a big deal for their digital commerce business.”

Video sharing is a business that has picked up steam amid the COVID-19 global pandemic, and the TikTok app is used by more than 800 million people each month as of July. The app was banned in India earlier this year, which was its largest market outside of China. BiteDance, based in Beijing, owns TikTok.

“TikTok would bring many benefits to Walmart, including bolstering its media and content platform to better compete with Amazon,” said Carol Spieckerman, CEO of Spiekerman Retail in Bentonville. “This is particularly relevant as Walmart tinkers with the value proposition for its Walmart+ offering. The potential to bundling content, possibly to include original programming, will round out Walmart’s media and advertising businesses and greatly enhance its relevance to third-party sellers and brands.”

Walmart does have some inroads in India with the Flipkart business, which does not have a video-sharing business in its portfolio.

Walmart’s previous foray in the video business — the acquisition of Vudu streaming service — was disappointing. The retailer sold the company in April to Fandango for an undisclosed amount. With roughly 100 million users, the Vudu app failed to compete with the likes of other large streaming services, like Netflix, which has 193 million users, who have access to original content in addition to movies and television series programming.

Analysts have said the TikTok video-sharing app holds a different opportunity that could help Walmart reach a younger demographic and grow data insights on consumer behavior and, more importantly, be a component for the retailer’s growing advertising business that it took control of in late 2019. Earlier this year, Walmart began offering a self-service ad platform on top of its managed service offerings.

Walmart Advertising Partners is the retail giant’s advertising arm, offering new self-service tools for search ads on its website and mobile app. Walmart Advertising Partners can deliver ads to customers at all touchpoints. That includes in-store via online grocery pickup video ads and through social media platforms, where suppliers can extend their reach and influence across Facebook, Instagram and Pinterest.