The potential megadeal is a lesson in thinking outside the box to thrive in chaos.
Recently, it was reported that an unlikely duo was partnering up to acquire the controversial and insanely popular social media platform TikTok. Walmart announced plans to join Microsoft as a co-investor, a few weeks after Microsoft publicly announced its intentions to purchase the video sharing service. The deal would include TikTok’s U.S., Canadian, Australian, and New Zealand businesses, and is rumored to be between $20 and 30 billion. President Trump intends to ban the application in the U.S. on September 15 if the company is not sold to American owners.
But why? Why is one of the world’s biggest technology companies teaming up with one of the world’s biggest retailers to buy the hottest social media platform on the planet? The short answer: money!
The long one? Let’s explore.
There are several forces that would motivate both Walmart and Microsoft to bid for TikTok. For one, it gets them closer to the app’s 100 million monthly active users (mostly Zoomers, the true digital natives, and a generation that is a world apart from their predecessors). But other factors, like the evolution of how consumers and businesses shop along with the technology they use – and what they expect from it – are also strong motivators.
Shortly after Microsoft expressed publicly their interest in buying TikTok, there was plenty of speculation as to why they were interested. The folks at Forbes posit that Microsoft is trying to expand their presence in the lucrative digital advertising space. With TikTok and LinkedIn in their stable of social media platforms, Microsoft has a sturdy foundation from which they can compete with market leaders Google and Facebook. Meanwhile, Jay Greene from the Washington Post reported that Microsoft wants to use TikTok to train AI.
Walmart’s interest in TikTok could also stem from something that ByteDance did with their China-only version of the app, Douyin. Like Instagram, YouTube, and other social media platforms, Douyin enables content creators to link to other websites — such as an online marketplace like Walmart+, the company’s answer to Amazon Prime — within their videos. In a statement from Walmart, the company said the deal “provide[s] Walmart with an important way … to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses.”
Thinking outside the box
One of the reasons that companies like Microsoft and Walmart are successful is because they are constantly innovating, adapting and thriving in their constantly changing environment.
Microsoft saw that cloud computing was going to become a powerful tool going forward — which frankly, isn’t good when your core competency is in personal computing and server tools — so they started building out their own cloud computing division. Now Azure makes up one-third of the company’s revenue.
Likewise, changes in the technoverse and the way customers shop began to challenge Walmart’s reign as the world’s largest retailer. In the same way megastores made it impossible for smaller retailers to compete, online marketplaces like Amazon made it hard for any brick and mortar business to succeed. So what is Walmart doing? Building out a competitive ecommerce business to make sure that Amazon doesn’t come and eat (all) their lunch.
But perhaps the largest motivator for both companies rests with the very reason TikTok is being forced into a sale: gaining access and control of the user data supplied through the explosively popular platform is so powerful that it can be weaponized … for geopolitical reasons or simply to bring down your competitors.
Patricia Ames is president and senior analyst for BPO Media, which publishes The Imaging Channel and Workflow magazines. As a market analyst and industry consultant, Ames has worked for prominent consulting firms including KPMG and has more than 15 years experience in the imaging industry covering technology and business sectors. Ames has lived and worked in the United States, Southeast Asia and Europe and enjoys being a part of a global industry and community.