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Walmart teams up with Microsoft in TikTok US bid, as Bytedance puts shutdown contingencies in place

By | Published on Friday 28 August 2020


Supermarket giant Walmart has teamed up with Microsoft in its bid to buy TikTok’s American business. Meanwhile, the video-sharing app’s current owner, China-based Bytedance, has reportedly begun preparations for a temporary shutdown in the US.

Despite going on the PR and legal offensive over President Donald Trump’s plans to ban its app, Bytedance is also still in talks with various parties about selling the TikTok business in the US and possibly some other markets too, most likely Canada, Australia and New Zealand.

If TikTok in the US was owned by an American company, Trump’s plan to ban the app would likely be called off. Although Bytedance’s specific deal with any new owner will need US government approval for that to be assured.

Microsoft has been favourite to acquire TikTok US for some time now, though rival technology company Oracle has also put together a consortium to bid for the app’s American operations. It’s thought Walmart was originally part of a third group of possible bidders rallied by Japan’s Softbank, but then it switched sides to ally with Microsoft instead.

Trump, of course, has said that Americans will be banned from transacting with TikTok from 15 Sep, while also ordering Bytedance to offload all its US assets by 12 Nov. Officially that’s because of concerns that the Chinese government has access to TikTok’s global audience and user-data, though it’s also seen as part of Trump’s “I’m tough on China” election schtick.

Either way, Trump’s government is going to want a prominent American company leading any consortium that buys TikTok’s US business. Hence Walmart was a good partner for Softbank.

However, it’s also thought that the President’s team reckon that a tech firm fronting any successful bid for TikTok US is more in line with the “it’s because we’re concerned about the data, honest” narrative. Which is why Walmart is better off partnering with Microsoft.

The supermarket firm says it reckons an interest in TikTok would help it “reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses”. It added: “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”.

Bytedance continues to deny all the allegations being made against it regarding China’s access to its global audience and data, and the firm’s lawyers will tell US judges that Trump’s executive orders instigating the ban and ordering the asset sale are illegal and unconstitutional.

Nevertheless, a sale of at least the US TikTok business now seems certain. The sudden departure this week of the app’s new American boss Kevin Mayer – mainly because his global CEO role is looking less global – pretty much confirms the imminent sale. Sources say Bytedance could pick their preferred bidder later today.

Assuming that happens, and sale talks get ramped up a gear as a result, it’s not clear what that means for Trump’s 15 Sep ban. If the sale is in its final stages and is completed before 12 Nov, will TikTok be allowed to continue operating Stateside in the meantime?

With plenty of uncertainty remaining, Bytedance has apparently instructed its engineers to make plans for a temporary shutdown of the TikTok app in the US, just in case.

According to Reuters, the company also has plans in place for compensating TikTok’s American employees, suppliers and partners if the ongoing political challenges result in any downtime. Though, sources say, those plans are very much a contingency that Bytedance bosses still hope won’t need to be put into effect.

A spokesperson for TikTok told Reuters: “We are confident that we will reach a resolution that ensures TikTok is here for the long run for the millions of Americans who come to the platform for entertainment, self-expression, and connection. As any responsible company would do, we are simultaneously developing plans to try to ensure that our US employees continue to get paid in any outcome”.

While all this goes through the motions, TikTok’s US General Manager Vanessa Pappas will fill in as interim CEO. Pappas worked at YouTube for seven years before joining TikTok in 2018 and has been a vocal defender of the app in the face of Trump’s various attacks.