The TikTok website of ByteDance Ltd. is displayed on a smartphone in a remote photo.
Andrew Harrer | Bloomberg | Getty Images
Walmart and Microsoft may seem like an unlikely partnership to acquire TikTok’s US assets, but until very recently the retailer had other plans.
Before Walmart partnered with Microsoft in recent days, Walmart was part of a consortium formed by SoftBank Chief Operating Officer Marcelo Claure, which also included Google parent company Alphabet, according to people familiar with the matter.
SoftBank’s Claure felt that the all-American image of Walmart and Google’s cloud computing infrastructure backbone could be a way for the Japanese technology company, which has specialized in recent years in buying young, high-flying technology companies, including Uber and WeWork, to did not ask to be named because the discussions were private. The deal structure would have had Walmart as the main buyer, with SoftBank and Alphabet acquiring minority interests. One or two other minorities have held talks to join the consortium, two of the people said.
Walmart wanted to be the exclusive provider of e-commerce and payments for TikTok and have access to user data to enhance those capabilities, one of the people said. But the people said the U.S. government wanted the main buyer of TikTok to be a technology company because that would better fit their national security reason for forcing Chinese owner ByteDance to disrupt TikTok’s US operations.
Walmart confirmed its partnership with Microsoft on Thursday, and released a statement outlining its interest in TikTok’s e-commerce and advertising opportunities.
“We believe that a potential relationship with TikTok US in partnership with Microsoft can add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers, as well as grow our marketplace and third-party advertising businesses,” it said. “We are confident that a Walmart and Microsoft partnership will meet both the expectations of U.S. TikTok users, while addressing the concerns of U.S. government regulators.”
Alphabet, which also owns YouTube and could gain significant anti-trust opposition if it takes over TikTok’s US assets, was particularly interested in TikTok as a new customer for cloud computing, and felt it was not in a position to make the deal to lead, the people said. That led to the consortium collapsing last week, leading Walmart, increasingly convinced that TikTok fits into its strategy, to partner with Microsoft on a bid instead.
Microsoft did not need SoftBank as a partner, with a capitalization of more than $ 1.7 trillion. Walmart’s red-state appeal and broad user base made sense as a partner both politically and financially, one of the people said.
TikTok has not decided between the Microsoft Walmart bid and a competing offering from Oracle, according to people familiar with the matter. An agreement, set to value TikTok’s $ 20 billion to $ 30 billion US operations, could be completed within the next 48 hours, according to people familiar with the matter.
TikTok, SoftBank and Alphabet declined to comment on the deal.
WATCH: Why Walmart got into the TikTok bidding war.
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