Donald Trump: US Treasury should get cut of TikTok deal
Aug 06 2020
But Trump, a real estate developer and former reality television star who has touted his "art of the deal", on Monday said "a very substantial portion" of any TikTok sale must go to the U.S. Treasury "because we're making it possible for this deal to happen".
In the letter to staff, which was shared by the company, he acknowledged the criticism, but said "many people misunderstand the current, complex situation".
He also warned he will ban the app, which is owned by China's ByteDance, on 15 September if there isn't a deal.
TikTok was under review by the Committee on Foreign Investment in the United States, known as CFIUS, a U.S. government group chaired by the Treasury Secretary that studies mergers for national-security reasons, for its acquisition of another video app, Musical.ly, in 2017. As a company centered on enterprise software, Microsoft's consumer-facing products are now limited: it only has Bing for search, LinkedIn for professional networking, and Xbox Live for gaming. However, a legal challenge is possible under the fifth amendment of the U.S. Constitution, which prohibits the government from seizing property without just compensation, as well as other laws, legal experts said.
"It is understandable that ByteDance is questioning whether the US government does want to see the deal happening [as] 45 days is a bit of a stretch for reaching a deal this size and with such complexity", said a Beijing-based venture investor who specializes in the consumer and media sector.
Trump's comments confirmed a Reutersreport 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.
Some of the legal experts say the White House could argue for Trump's behavior that imposing a fee on ByteDance would deprive it of resources that would otherwise support China's government on technology initiatives that could harm USA interests.
"It's a little bit like the landlord/tenant; without a lease the tenant has nothing, so they pay what's called key money, ' or they pay something", Trump said.
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.
"What makes TikTok TikTok is the core algorithm that was generated by ByteDance", said Dan Ives, managing director at Wedbush Securities.
However, the USA has not given out any evidence that indicated TikTok had ever bribed US officials in order to obtain or retain business in the U.S.
"In light of the current situation, ByteDance has been evaluating the possibility of establishing TikTok's headquarters outside of the US, to better serve our global users", the company said. But a sale to a United States company is seen as a way to alleviate such concerns.
By April, TikTok, combined with its Chinese version Douyin, had been downloaded more than 2 billion times globally, according to market intelligence firm Sensor Tower. If TikTok was to be acquired by Microsoft in the USA, the people said that the algorithms would likely diverge over time.
Trump maintained that a large share of any TikTok purchase price should go to the United States treasury, and that Microsoft "agreed with me very much".
Navarro said the Chinese government and military use Microsoft software "to do all the things they do".
Dmitri Robinson, a 20-year-old TikTok user with more than 270,000 followers, said short-form video apps Triller and Byte are seen as the top two contenders for the next hottest app among conversations with friends and videos he has seen on TikTok.
On Monday, he clarified that the company could continue to operate in the US if they sold their USA arm to an American-owned company.
The Committee on Foreign Investment in the United States (CFIUS), a USA government panel that reviews deals for potential national security risks, has given ByteDance until September 15 to negotiate a sale of TikTok to Microsoft Corp.
"Instead, I think this is part of the splintering of the Internet into competing national networks", Lemley said.