The TLDR: It was a day of big developments for the company. Its CEO Kevin Mayer resigned, and Walmart (yes, Walmart!) announced its interest in buying its US operations—likely in partnership with Microsoft. All this while TikTok is suing to stop President Trump from banning the app. For Indians, a Walmart-owned TikTok USA is an interesting new wrinkle—given the heated rumours that Reliance is in talks to buy TikTok India. How will that work? 

A quick recap 

Here are the basic deets on how we got here (We did a full explainer here on TikTok’s troubles)

• TikTok is owned by a $140 billion Chinese company called ByteDance whose CEO Zhang Yiming is a former Microsoft engineer. 
• Since its launch in 2017, TikTok has become a global powerhouse spreading across 150 markets worldwide, offered in 75 languages. 
• But the Chinese government’s souring relationships with a whole lot of countries has jeopardised its once-bright future. 
• The app has been banned in India. Japan and Australia have made noises about following suit. 
• Trump has threatened to ban it—giving Bytedance until November 12 to find a buyer for its US operations or get the hell out. The reason: TikTok has vast access to American users and could share that information with Beijing—which poses a national security threat.
• In response, TikTok filed a lawsuit to block the ban claiming that Trump issued the order "without any evidence to justify such an extreme action, and without any due process."

List of suitors: Some of the heaviest hitters have lined up to woo ByteDance for TikTok’s hand. Rumoured suitors include Twitter and Oracle. Walmart first planned to make its bid in partnership with Google’s parent company Alphabet and/or venture mega-fund SoftBank. But it is now joining hands with Microsoft—which remains the favourite in this race.

The selling price: is rumoured to be anywhere between $20-30 billion, and the deal is likely to include TikTok’s operations in New Zealand, Canada and Australia, as well.

First, the resignation

Kevin Mayer threw in the towel after just three months on the job. The former Disney whiz was brought in to put a global face on a ‘Made in China’ app—and to underline the seriousness of its global ambition. Mayer was not just CEO of TikTok but also COO of ByteDance. Also: maybe the only decent-looking digital tech titan.

The stated reason: Back in May, TikTok was already facing allegations of suppressing anti-China content. And rising hostility toward Beijing—both due to its mishandling of Wuhan and aggressive foreign policy—made everything much worse. And that’s what Mayer referenced in his letter to TikTok employees:

“In recent weeks, as the political environment has sharply changed, I have done significant reflection on what the corporate structural changes will require, and what it means for the global role I signed up for…I understand that the role that I signed up for–including running TikTok globally–will look very different as a result of the US Administration’s action to push for a sell off of the US business.”

What it means: Mayer’s announcement came as a shock to ByteDance employees—but maybe not to their CEO Zhang who has kept Mayer out of talks with Microsoft. Mayer’s hand was also forced by a leaked report of his impending resignation in the Financial Times. But more importantly, his departure signals that a deal is indeed imminent. And as Wall Street Journal notes, Mayer “clearly didn’t relish becoming middle management at whatever tech giant lands the company.”  

Enter, Walmart!

Soon after Mayer resigned, Walmart announced its plan to bid for TikTok in partnership with Microsoft. This was no less of a shocker since Walmart is viewed as the American equivalent of Big Bazaar—albeit with much, much deeper pockets. But analysts argue that it has very good reasons for its move:

One: it helps Walmart make a long-desired transition from an offline retail empire to digital e-commerce behemoth—and take on its great nemesis Amazon. Buying Flipkart in India was part of this strategy. And it aims to become an e-commerce platform for third-party sellers in the US as well.

Two: The company has also developed its own advertising network, selling ad space to its suppliers. Growing that arm of its business could make it an attractive alternative to the current monopoly of big tech companies: 

“TikTok would give Walmart access to a large, young and loyal group of users coveted by advertising agencies and their blue-chip clients, who might shift some of their marketing budgets from Google, Facebook and Amazon over to Walmart’s in-house media arm.”

Three: Walmart has been trying to move into digital content. In 2018, it struck a deal with Metro-Goldwyn-Mayer to create original series for its ad-supported streaming service, Vudu. But that never really took off, and it finally sold the service in April. TikTok offers a second shot at that prize.

Ok, so why do I care?

Two good reasons.

One: It raises questions about TikTok’s return to India. In his note to Bytedance employees, Zhang promised to move quickly “to resolve its issues in the United States and India,” but said he “cannot get into details at this point.” 

But those details will prove tricky if he sells his US and India operations to separate companies—especially if these are Walmart and Reliance who are fierce competitors in the e-commerce space at home. If so, how will TikTok India interact with TikTok US? Or will Zhang eventually throw TikTok India Walmart’s way—which would love to get that leg up on both Amazon and Reliance in India? Will Modi-ji let TikTok back into the country without a Jio vaccine?

Two: A change of ownership may irrevocably change TikTok itself. Both Walmart and Reliance are in the business of selling. Irrespective of who lands the prize, TikTok may become a platform solely dedicated to harnessing user data to sell stuff, be it ads or products. It will be everything you hate about Facebook, but on steroids. 

As one industry expert notes, “Combining social engagement with commerce is the magic formula for the future of retail.” But the results will not be quite as magical for TikTok fans whose beloved app may never be the same again.

Reading list

New York Times has the best overview of the potential sale. Bloomberg and MarketWatch have the best reads on why this is a win for Walmart. Wall Street Journal’s profile of Zhang—which includes his fierce resistance to selling TikTok—is excellent but behind a paywall. The Atlantic explains why it doesn’t matter if TikTok finds an American buyer or not—and why both outcomes are equally bad. We did an explainer on TikTok’s political woes—and took a look at whether it is indeed guilty of attributed crimes.