Trump Seeks TikTok Payment to U.S., Despite No Clear Authority
It would be unprecedented for the U.S. govt to collect a cut of a transaction involving firms in which it doesn’t hold a stake.
(Bloomberg) -- President Donald Trump repeatedly insisted on Monday that any sale of TikTok’s U.S. operations would have to include a substantial payment to the U.S. -- but it wasn’t clear under what authority he can extract a payout.
It would be unprecedented, based on recent history, for the U.S. government to collect a cut of a transaction involving companies in which it doesn’t hold a stake. Trump said the money would come from China or an American buyer such as Microsoft Corp.
“The United States should get a very large percentage of that price, because we’re making it possible,” Trump told reporters at a news conference Monday evening. “Whatever the number is, it would come from the sale, which nobody else would be thinking out but me, but that’s the way I think. And I think it’s very fair.”
Earlier in the day, Trump said TikTok will have to close in the U.S. by Sept. 15 -- unless there’s a deal to sell the social network’s domestic operations to Microsoft or another American company.
Trump set off a furious scramble over the fate of the Chinese-owned app on Friday, when he said he would ban the company’s operations through an executive action on Saturday. But the weekend passed without any official move from the White House, after the president spoke with Microsoft Chief Executive Officer Satya Nadella about his company’s efforts to purchase the viral video application.
Clock Ticking
Microsoft said in a blog post that it was aiming to complete a deal for TikTok’s operations in the U.S., as well as in Canada, Australia and New Zealand, no later than Sept. 15. The White House had insisted upon that deadline, according to people familiar with the matter. It could prove an uphill climb, with key details for the deal -- including price -- still not worked out, people familiar with the discussions said.
Microsoft’s blog post also said it’s committed to “providing proper economic benefits to the United States, including the United States Treasury.” That language referred to tax revenue and job creation, according to a person familiar with the matter -- rather than some sort of special transaction fee.
Trump compared the arrangement to landlord-tenant dynamics. “Without the lease, the tenant doesn’t have the value,” he said. “Well, we’re sort of in a certain way the lease. We make it possible to have this great success.”
The U.S. assesses fees associated with deals under review by the Committee on Foreign Investment in the United States, or CFIUS, which investigates overseas acquisitions of U.S. businesses. But those charges -- set on a sliding scale and going no higher than $300,000 -- didn’t fit what Trump described.
CFIUS has been reviewing ByteDance Ltd.’s 2017 purchase of the lip-synching app Musical.ly that was later folded into TikTok.
The White House has said it’s concerned that ByteDance could be compelled to hand over American users’ data to Beijing or use the app to influence the 165 million Americans, and more than 2 billion users globally, who have downloaded it. And Trump has looked to ratchet up pressure on China ahead of November’s election, frustrated by slow implementation of the trade pact inked earlier this year and the spread of the coronavirus for which he blames China.
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