In another turn of events surrounding Chinese firms in the United States, American multinational retail corporation Walmart on Thursday announced big that it was teaming up with Microsoft for a potential bid to acquire TikTok's US operations as the Chinese-owned social platform seeks to comply with a White House order that asked the company to divest its operations in the country.
Quoting sources close to the deal talks, The New York Times reported that discussions are still underway among other suitors for TikTok as well. It is however unclear which companies will ultimately secure a deal, though TikTok is likely expected to make a decision in the coming days, they added.
TikTok, the popular Chinese video application which has come under scrutiny from the Trump administration due to concerns of privacy and ties to the Chinese state, is likely to sell its US, Canadian, Australian and New Zealand operations for a valuation in the USD20 billion to USD30 billion range, but a price still hasn't been decided, the people said further.
In a statement, Walmart was quoted as saying, "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."
TikTok, which is owned by the Chinese internet company ByteDance, has been under pressure from the Trump administration, which has become increasingly tough on China in the wake of the latest tension since the beginning of this year.
TikTok in US
White House officials have accused TikTok of possessing a national security threat because it provided data about American users to Beijing. Earlier this month, President Donald Trump signed an executive order mandating that TikTok sell its US operations by mid-September or cease transactions within the country.
That has pushed ByteDance and TikTok to seek a buyer, in what could amount to a blockbuster deal. Initially, the bidders discussed that Microsoft would only be taking just a minority stake in TikTok, before the scope of a deal ballooned.
The online advertisement market is growing fast, expanding by about 16 per cent in 2019, as per eMarketer records.
While growth is likely to slow this year, Microsoft has revealed that the market could rebound strongly in 2021, with growth projected at about 17 per cent. By acquiring TikTok, Microsoft could have a shot at becoming a meaningful player in the digital advertising space - taking on the likes of Facebook and Google.
TikTok reportedly has as many as 80 million users in the US and its base has been growing fast over recent months with the Covid-19 pandemic forcing more people to go online to socialize and entertain themselves.
Although TikTok has not yet started to meaningfully monetize its users, it certainly has a lot of potential.
Meanwhile, the pandemic has shown the importance of e-commerce to Walmart and other big-box retailers. In an earnings report earlier this month, Walmart said its online sales has doubled during the quarter.
