Thursday morning, Walmart confirmed that it would work with its longtime technology partner Microsoft on a bid.
“The way TikTok has integrated e-commerce and advertising capabilities in other markets is a clear benefit to creators and users in those markets," the company said in a statement. “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 added that it believes a deal with Microsoft "would meet both the expectations of US TikTok users while satisfying the concerns of US government regulators.”
CNBC first reported Walmart’s participation in the bidding. Microsoft has previously confirmed it was in negotiations, with a deadline of Sept. 15.
TikTok spokeswoman Hilary McQuaide declined to comment on the timing of any announcement regarding a deal.
TikTok is under intense pressure to unload its U.S. operations after Trump issued an executive order this month banning TikTok in the United States beginning the week of Sept. 20. Trump contends TikTok is a national security threat because of the company’s Chinese ownership.
Analysts say the deal could give Walmart an inroad to a coveted demographic that it has long struggled to attract: younger shoppers.
“A social platform like TikTok would give Walmart easy access to the very audience it wants and needs to attract,” Neil Saunders, managing director of GlobalData Retail, wrote in a note to clients. “Over time, the platform could also become a significant channel through which Walmart could directly generate sales.”
Walmart, which makes about half of its annual revenue from grocery sales, has aggressively bought up online apparel companies and other specialty brands, including Moosejaw and Bonobos, in recent years, in hopes of building up its online presence. The company posted $514 billion in revenue last year, nearly double Amazon’s $281 billion. (Amazon founder and chief executive Jeff Bezos owns The Washington Post.)
“Although the world of social media seems a million miles away from selling cans of soup, Walmart’s interest in buying TikTok underlines the seriousness of its digital ambitions,” Saunders said. “The company has already been leaning heavily into e-commerce and has made extensive investments to strengthen its online presence across food and non-food categories.”
This month, Microsoft confirmed its interest in buying the TikTok service in the United States, Canada, Australia and New Zealand. At the time, Microsoft acknowledged its chief executive, Satya Nadella, had talked with Trump and that the company had committed to addressing the president’s concerns about the social media platform.
TikTok is pursuing a deal while at the same time fighting for its independence in the United States. On Monday, the company sued the administration, alleging that it was not given due process and asserting that it is not a national security threat.
The Microsoft-Walmart bid could face competition from a possible offer by business-software giant, Oracle, which is working with ByteDance’s top U.S. investors, General Atlantic and Sequoia Capital, according to a report in the Wall Street Journal. And Twitter also had preliminary talks to acquire a piece of TikTok’s operations.
Whichever company emerges as TikTok’s preferred suitor needs to move quickly to close a deal. The order Trump signed Aug. 6 gave TikTok 45 days to close a deal before any U.S. business or person is barred from transacting business with the company. Microsoft has said it expects to complete its discussions with TikTok “no later than September 15.”
Trump issued a second order concerning ByteDance on Aug. 14, ordering the company to divest the video app Musical.ly that it acquired in 2017. The Committee on Foreign Investment in the United States had been investigating that merger to determine if there is a national security concern over the deal. Trump’s order said there is “credible evidence” that the merger “might take action that threatens to impair the national security of the United States."