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Walmart teams up with Microsoft to close deal on TikTok's U.S. Operations

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Walmart is teaming up with Microsoft in an effort to close a deal on TikTok’s U.S. Operations. Yahoo Finance’s tech editor Dan Howley joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss the latest developments around TikTok.

Video Transcript

ALEXIS CHRISTOFOROUS: Walmart is teaming up with Microsoft in the hopes of buying TikTok's US operations. And the price tag could be as much as $30 billion. Yahoo Finance's tech editor Dan Howley is joining us now.

Hey, good morning, Dan. So I guess a lot of folks are looking at this scratching their heads, going what does Walmart want to have to do with TikTok? But as you look a little deeper, you think that marriage can actually make some sense?

DAN HOWLEY: Yeah, it actually does kind of make sense in a way. Walmart basically is teaming up with Microsoft, or looking at teaming up with Microsoft for the operations of the US, Canadian, New Zealand, and Australian versions of TikTok. Basically what could happen here is Walmart would get a hold of the data that's collected on users. And then they also could put in some kind of e-commerce elements to help boost its own e-commerce platform that is trying to take on Amazon.

Now that would allow for influencers to then perhaps peddle some of Walmart's wares, similar to what we see on Instagram where influencers peddle, I guess, Kardashian's wares or something. But we would likely see something along those lines with a Walmart team up. And, you know, look, Walmart is not the hip brand. Microsoft is not really a hip brand.

TikTok joining those or being sucked up by those could give them some more cred with the younger set. And Microsoft needs that going forward. The only real kind of connection they have with younger users is the Xbox.

You look at something like an Apple or a Google, and kids use those all the time. But they're not using Microsoft devices as often as they used to. So this could also help Microsoft in that respect.

BRIAN SOZZI: Hey, Dan you leave Walmart alone. It's fun to get my oil changed there every couple months. It's a good place to be.

But yeah, I think that so many investors are wondering what would the acquisition or partnership, whatever it is, what would it mean in that battle between Walmart and Amazon?

DAN HOWLEY: I really think it would end up giving Walmart a little bit of-- not necessarily an edge, but a better footing against Amazon, as far as the ability to search for and surface products through Walmart's website. You have something like Amazon's search, and that's where so many people now start their product searches online, right? They're not going to Walmart to start their product searches. And then that can translate to sales for Amazon.

Now, if we have teens, users using TikTok, discovering new products, and then that links off to Walmart, well, it keeps people out of the Amazon flow. And I think that would give Walmart a benefit. It doesn't necessarily mean that it would be on equal footing with Amazon as far as e-commerce goes. But it could give them a leg up. And I think that's something that, obviously, they would appreciate and they've been looking to do.

They're trying to launch their own service similar to Prime. They're trying to get a video platform up and running that would work with that, similar to Prime. So I think this would really give them the opportunity to work within those lanes and provide kind of a better chance to stand up to Amazon.