Give US gov’t ‘substantial portion’ of TikTok’s sale price: Trump

The United States government should get a “substantial portion” of the sale price of the US operations of popular short-video app TikTok, US President Donald Trump said, and warned he will ban the service in the country on September 15 without a sale.

The turnaround came after Trump said last week he was planning to ban the Chinese-owned video app’s US operations as soon as Saturday after initially dismissing a possible sale to Microsoft.

Reuters news agency reported last week that some investors are valuing TikTok at about $50bn, citing people familiar with the matter.

“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 … 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,” Trump said on Monday.

Trump later defended his push for a cut, adding: “Nobody else would be thinking about but me, but that’s the way I think.”

Nicholas Klein, a lawyer at DLA Piper, said that generally “the [US] government doesn’t have the authority to take a cut of a private deal” through the Committee on Foreign Investment in the United States (CFIUS), the interagency committee that reviews some foreign investments in the US.

It was not clear how the US government would receive part of the purchase price.

Klein added it “will close down on September 15 unless Microsoft or somebody else is able to buy it and work out a deal, an appropriate deal, so the Treasury … of the United States gets a lot of money.”

China reacted angrily to Trump’s attempt to get a US company to acquire the TikTok. The state-run China Daily newspaper said on Tuesday that China would not accept the “theft” of a technology company and is able to respond.

The US’s “bullying” of Chinese tech companies was a consequence of Washington’s zero-sum vision of “American first” and left China no choice but “submission or mortal combat in the tech realm”, the paper said in an editorial.

China had “plenty of ways to respond if the administration carries out its planned smash and grab”, it added.

TikTok said Monday it was “committed to continuing to bring joy to families and meaningful careers to those who create on our platform as we build TikTok for the long term. TikTok will be here for many years to come.”

Daniel Elman, analyst at Nucleus Research, said a sale “could foreshadow a growing wave of US company acquisition of Chinese internet properties, particularly if the geopolitical tensions continue to mount.”

Elman said that could impact Tencent’s WeChat.

Secretary of State Mike Pompeo referenced WeChat on Sunday and said Trump “will take action in the coming days with respect to a broad array of national security risks that are presented by software connected to the Chinese Communist Party.”

US officials have said TikTok poses a national risk because of the personal data it handles. TikTok CEO Kevin Mayer said in a blog post last week that the company was committed to following US laws and was allowing experts to observe its moderation policies and examine the code that drives its algorithms.

Trump’s comments confirmed a Reuters report on Sunday that he had agreed to give China’s ByteDance, the company behind TikTok, 45 days to negotiate a sale of the short video platform to Microsoft.

Landlord-tenant relationship

Trump, a former New York real estate developer, compared TikTok to the landlord-tenant relationship, suggesting TikTok is like a tenant. “Without a lease, the tenant has nothing – so they pay what’s called key money, or they pay something.”

He said he did not mind “whether it’s Microsoft or somebody else – a big company, a secure company, very, very American company buy it.”

Microsoft said Sunday that CEO Satya Nadella had spoken to Trump and “is prepared to continue discussions to explore a purchase of TikTok in the United States.”

Microsoft said Sunday it is “committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.”

Many prominent Republicans, including House Republican Leader Kevin McCarthy, issued statements in support of a Microsoft acquisition of TikTok’s US operations. Some congressional aides are worried about a backlash by younger voters against the party if Trump bans TikTok, which has 100 million American users.

Microsoft and ByteDance gave the US government a notice of intent to explore a preliminary proposal for Microsoft to purchase the TikTok service in the US, Canada, Australia, and New Zealand.

US Senate Democratic leader Chuck Schumer also backed the sale, while a senior White House adviser raised concerns about a sale to Microsoft.

“A US company should buy TikTok so everyone can keep using it and your data is safe,” Schumer said on Twitter, adding: “This is about privacy. With TikTok in China, it’s subject to Chinese Communist Party laws that may require handing over data to their government.”

White House trade adviser Peter Navarro suggested on Monday that Microsoft could divest its holdings in China if it were to buy TikTok.

“So the question is, is Microsoft going to be compromised?” Navarro said in an interview with the CNN broadcast network. “Maybe Microsoft could divest its Chinese holdings?”

Navarro said the Chinese government and military use Microsoft software “to do all the things they do”.