Donald Trump is demanding the U.S. government somehow get a juicy cut of any deal for Microsoft to buy Chinese-owned video app TikTok—or else.
TikTok is owned by Beijing-based ByteDance, which over the past year has triggered concerns that the Chinese government could order the firm to assist it in espionage against the app’s estimated 80 million daily active U.S. users. There’s been no evidence that the threat is anything but theoretical, and the company claims that no U.S. user data is ever sent to China, but the White House has announced its intent to ban the app entirely unless there is a complete change of ownership. Over the weekend, Microsoft confirmed it was working on a deal that would have ByteDance divest itself of TikTok and sell it off to Microsoft, thus severing it from China and potentially resolving the suspicions of a national security threat.
As of last week, the White House was opposed to any deal and Trump was still insisting that the app will be banned regardless of what happens. That’s changed. Per TechCrunch, Trump told reporters on Monday that he talked with Microsoft CEO Satya Nadella over the weekend and reached a new understanding.
But Trump has managed to insert what could be a poison pill into the deal: Microsoft will have to pay off the feds to look the other way. TechCrunch’s transcript makes it clear that the president is under the impression that the deal is only possible with U.S. government facilitation and thus a “very substantial” portion of a sale would be owed to the Treasury:
It’s probably easier to buy the whole thing than to buy 30% of it. ‘Cause I say how do you do 30%? Who’s going to get the name? The name is hot, the brand is hot. And who’s going to get the name? How do you do that if it’s owned by two different companies? So, my personal opinion was, you are probably better off buying the whole thing rather than buying 30% of it. I think buying 30% is complicated.
... I did say that if you buy it, whatever the price is, that goes to whoever owns it, because I guess it’s China, essentially, but more than anything else, I said a very substantial portion of that price is going to have to come into the Treasury of the United States. Because we’re making it possible for this deal to happen. Right now they don’t have any rights, unless we give it to ’em. So if we’re going to give them the rights, then it has to come into, it has to come into this country.
It’s a little bit like the landlord-tenant [relationship]. Uh, without a lease, the tenant has nothing. So they pay what is called “key money” or they pay something. But the United States should be reimbursed, or should be paid a substantial amount of money because without the United States they don’t have anything, at least having to do with the 30%.
While it’s certainly very possible that Trump was just making up shit on the go or is still misunderstanding basic economic concepts like tariffs, this could also be interpreted as something akin to extortion. The president didn’t elaborate on what legal basis such a payoff could be justified, likely because there isn’t one beyond his desire to score political points on any deal, or whether Nadella had agreed to that condition.
According to Reuters, one concrete outcome of the discussion was that Trump told Nadella that the Committee on Foreign Investment in the United States (which has oversight of international deals) will give it 45 days to negotiate a transaction. If that deadline passes without a deal, Trump told reporters on Monday, the outcome will be a ban on TikTok effective Sept. 15.
It’s also unclear whether the White House will decide to impose other conditions on the deal. Trump trade adviser Peter Navarro told CNN in an interview on Monday that Microsoft should be required to sell off any operations it has in China if it wants to buy TikTok, per the New York Times.