Walmart is teaming up with Microsoft on TikTok bid

The retail giant confirmed to CNBC that it’s interested in buying the popular short-form video application.

Walmart shares are up 5% on the news.

TikTok’s Beijing-based parent company, ByteDance, is nearing an agreement to sell its U.S., Canadian, Australian and New Zealand operations in a deal that’s likely to be in the $20 billion to $30 billion range, sources say. It has not yet chosen a buyer, but could announce the deal in coming days, the sources say.

With Walmart’s confirmation, it joins several others bidding on the tech company, including Oracle.

Walmart is pursuing the acquisition at a time when it’s trying to better compete with Amazon. It plans to launch a membership program, called Walmart+, soon. The subscription-based service is the retailer’s answer to Amazon Prime, which includes original TV shows and movies.

In a statement, the big-box retailer said TikTok’s integration of e-commerce and advertising “is a clear benefit to creators and users in those markets.” It did not say how it would use TikTok or whether it would be part of Walmart+.

“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,” it said. “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.”

On Walmart’s recent earnings call, CEO Doug McMillon acknowledged the buzz around the membership program — but did not say when it would launch or what perks it would use to stand out. He said the program will speed up deliveries for customers through curbside pickup and delivery, strengthen relationships with them and collect valuable data.

Walmart had previously worked on a deal with SoftBank, but that bid faced resistance from the U.S. government because it did not include a cloud technology backbone component, people familiar with the matter said.

With Microsoft involved, Walmart could be better positioned. Two years ago, Walmart announced a five-year cloud deal with Microsoft. The retailer adopted Microsoft’s Azure cloud infrastructure and a bundle that includes the Office 365 productivity applications. 

TikTok was pushed to look for a buyer after U.S. Secretary of State Mike Pompeo said in July that he was considering banning TikTok and other Chinese applications for security reasons. The U.S. government said it’s concerned the Chinese government can access user data collected by TikTok.

The Pentagon banned TikTok from government-issued mobile devices in January. The U.S. House of Representatives followed suit in July. President Donald Trump joined calls for the app’s ban, as his campaign urged people with ads on Facebook and Instagram to sign a petition.

— CNBC’s Alex Sherman and Jordan Novet contributed to this story.