Owning TikTok Could Serve Walmart Well In Its Retail Business, Say Analysts

The political tug of war over TikTok has created an opportunity for retailer Walmart to purchase an app that has a huge fan following in the United States and in some other markets.

On Thursday, the company confirmed that it was joining the bid to purchase the Chinese owned short video sharing app in partnership with Microsoft. The owner of the app is the Chinese company ByteDance.

The administration of the United States president Donald Trump issued a couple of executive orders to put a ban on the app, preventing American companies from transacting with the app and its owner ByteDance, over charges that the company could hand over personal data of its millions of US users to the Chinese authorities.

Those allegations have been denied by TikTok and the company has filed a legal suit in a US court against the august 6 executive order from Trump. There are other American companies that are interested in the app including Oracle.

For many analysts, Walmart, the largest retailer of the world, is an unlikely buyer or a misfit for the tech platform that promoted viral videos and numerous has millions of teenage users. But many analysts also believe that Walmart not being a tech company could actually be an advantage for it in the bid.

For example, some of the largest tech companies of America such as Amazon or Facebook would find it hard to get clearance because these companies already possess a huge tech presence and hence there would be serious antitrust issues while clearing any deal for TikTok.

“For Walmart, it would be a coup to get part of this asset,” said Daniel Ives, managing director and technology analyst at Wedbush Securities. “It really falls into their lap, given the political backdrop.”

For Walmart, which is trying to compete with Amazon, the deal would mean expanding its reach to customers and a rich trove of valuable consumer data, say analysts and industry watchers. It affiliation with the video platform could also shake up its reputation.

Owning TikTok would mean that Walmart would be instantly be able to reach hundreds of millions of consumers through the app since thee app, according to its claims, has about 100 million monthly active users in the US. That is an 800 per cent growth compared to the figures in January 2018. This data was available in the lawsuit filing by the company.

TikTok said it has more than 50 million daily US users.

“This would be really changing the perception of your grandfather’s Microsoft and Walmart,” Ives said.

Some analysts also believe that Walmart also wants to change its strategy on content by making a bid on TikTok together with Microsoft. On multiple occasions previously, Walmart had tried to break into the video and entertainment business previously on more than one occasion, but had shelved such plans. Among them, it bought video-on-demand service Vudu in 2010 for an undisclosed sum — but then sold it to movie ticketing company Fandango this year.

(Adapted from CNBC.com)

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