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Walmart's Original TikTok Ownership Plan Was to Partner With Alphabet

By Rich Duprey - Aug 28, 2020 at 2:08PM

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But the government didn't want a retailer being the majority owner of the video-sharing app.

Walmart (WMT 1.85%) became the surprise frontrunner in the race to acquire TikTok after partnering with Microsoft (MSFT 1.70%), but it actually had plans to be the lead buyer of the online video-sharing site.

CNBC said the retailer was slated to be the majority owner in a consortium of buyers that included Alphabet (GOOG 2.36%) (GOOGL 2.39%) and Japan's Softbank, but the U.S. government shot the idea down, saying a tech company needed to lead the buying since it was forcing the sale over national security concerns.

Couple mugging for a smartphone photo.

Image source: Getty Images.

A valuable asset

TikTok has exploded in popularity on social media, but the video-sharing app had been collecting user data surreptitiously behind a layer of encryption, a process The Wall Street Journal notes is banned by Alphabet's Android operating system.

TikTok is owned by ByteDance, one of China's largest tech companies. The Trump administration is concerned the user data could be turned over to the Chinese government to be used for blackmail, corporate espionage, or for tracking government employees who have the app installed on their phones.

ByteDance denies it shares the data with the government, and it has changed some of its data-collection processes, but TikTok was facing a ban on its use in the U.S. if it wasn't sold. ByteDance is reportedly selling its North American, Australian, and New Zealand operations.

Walmart was interested in acquiring TikTok's U.S. assets to become the exclusive e-commerce and payments processor for the app. Softbank, which had put together the consortium, felt Google's cloud-computing expertise would be an asset in backing Walmart's favorable retail image.

However, because Google didn't want to lead the acquisition, the consortium couldn't surmount the government's opposition, and Walmart turned to Microsoft as a partner.

ByteDance is still considering whether to accept their bid or a competing one from Oracle.


Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
$132.22 (1.85%) $2.40
Microsoft Corporation Stock Quote
Microsoft Corporation
$291.91 (1.70%) $4.89
Alphabet Inc. Stock Quote
Alphabet Inc.
$121.68 (2.39%) $2.84
Oracle Corporation Stock Quote
Oracle Corporation
$79.15 (2.58%) $1.99
Alphabet Inc. Stock Quote
Alphabet Inc.
$122.65 (2.36%) $2.83
SoftBank Group Corp. Stock Quote
SoftBank Group Corp.
$20.90 (1.95%) $0.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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