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Why Walmart joining forces with Microsoft to buy TikTok is not so shocking

WMT) owning a piece of a surging digital business that spews out zany videos made by teens and boomers may not be as bizarre as it seems at first blush.

rose as much as 5% in Thursday trading as news surfaced that the giant retailer will join forces with long-time TikTok suitor Microsoft (MSFT) in a bid to buy the company.

“The way TikTok has integrated e-commerce and advertising capabilities in other markets is a clear benefit to creators and users in those markets. We believe a potential relationship with TikTok US in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses.  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,” a Walmart spokesperson told Yahoo Finance in an emailed statement.

The spokesperson declined to comment further beyond the statement.

A TikTok logo seen displayed on a smartphone with a computer in the background.(Photo Illustration by Sheldon Cooper/SOPA Images/LightRocket via Getty Images)

For Walmart, partnering up with Microsoft for TikTok would be a long-term win argues Wedbush Securities analyst Dan Ives.

“Walmart would be clearly interested in owning TikTok for its potential e-commerce and advertising capabilities to further boost its consumer presence as it further battles Amazon (which cannot touch TikTok given antitrust issues) in the field,” Ives says.

In layman’s terms, Walmart would get a great deal of data on human beings to help fuel decisions across its business. The company could also turn TikTok into a real-time place to buy merchandise – not unlike what Facebook has done with Instagram.

spent $16 billion to buy a majority stake in India’s surging e-commerce platform FlipKart.” data-reactid=”38″>Walmart is no stranger to making splashy, transformational tech deals under CEO Doug McMillon. One of McMillon’s first big moves as Walmart CEO came in 2016 with the $3 billion purchase of Jet.com. The acquisition of Jet’s technology and team has unleashed a boom in Walmart’s online business ever since. And in 2018, McMillon spent $16 billion to buy a majority stake in India’s surging e-commerce platform FlipKart.

@BrianSozzi and on LinkedIn.” data-reactid=”39″>Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.” data-reactid=”50″>Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.

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