Trump says US should receive ‘very large’ slice of TikTok deal
President Donald Trump repeatedly insisted on Monday that any sale of TikTok’s US operations would have to include a substantial payment to the US – but it was not clear under what authority he can extract a payout.
It would be unprecedented, based on recent history, for the US government to collect a cut of a transaction involving companies in which it does not hold a stake. Mr Trump said the money would come from China or an American buyer such as Microsoft, Bloomberg reported on Monday.
“The US should get a very large percentage of that price, because we are making it possible,” Mr Trump said.
“Whatever the number is, it would come from the sale, which nobody else would be thinking out but me, but that is the way I think. And I think it is very fair.”
Earlier in the day, Mr Trump said TikTok would have to close in the US by September 15 – unless there is a deal to sell the social network’s domestic operations to Microsoft or another American company.
Mr 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 US president spoke with Microsoft chief executive Satya Nadella about his company’s efforts to purchase the viral video application.
However, Beijing will not accept an acquisition of TikTok’s US operations by Microsoft and may take action against Washington if a sale is forced, the state-run China Daily said in an editorial yesterday.
“China will by no means accept the ‘theft’ of a Chinese technology company, and it has plenty of ways to respond if the administration carries out its planned smash and grab,” the China Daily said, without specifying options.
“With competitiveness now dependent on the ability to collect and use data, it offers an either-or choice of submission or mortal combat in the tech realm.”
Microsoft said in a blog post that it intended to complete a deal for TikTok’s operations in the US, Canada, Australia and New Zealand no later than September 15. The White House had insisted upon that deadline, according to sources. It could prove to be an uphill climb, with crucial details for the deal – including price – still not worked out, Bloomberg reported.
Microsoft’s blog post also said it is committed to “providing proper economic benefits to the US, including the US Treasury”.
That language referred to tax revenue and job creation, according to a source – rather than some sort of special transaction fee. Mr 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 US assesses fees associated with deals under review through the Committee on Foreign Investment in the United States, which investigates overseas acquisitions of US businesses. But those charges – set on a sliding scale and going no higher than $300,000 (Dh1.1 million) – did not fit what Mr Trump described.
CFIUS has been reviewing ByteDance’s 2017 purchase of the lip-synching app Musical. ly that was folded into TikTok.
The White House has said it is concerned that ByteDance could be compelled to hand over US user 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 Mr Trump has looked to ratchet up pressure on China before November’s election, frustrated by slow implementation of the trade pact signed earlier this year and the spread of the coronavirus for which he blames China.
White House trade adviser Peter Navarro also 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?” Mr Navarro said in an interview with CNN. “Maybe Microsoft could divest its Chinese holdings?”
In an earlier interview with Fox News, Mr Navarro said any potential buyer of TikTok that has operations in China could be a problem. He cited Microsoft’s Bing search engine and Skype platform, saying they “effectively are enablers of Chinese censorship, surveillance and monitoring”.
Microsoft has more than 6,000 employees in China and offices in Beijing, Shanghai and Suzhou, according to Reuters.
While the company has been there for decades, business from China accounts for about 1 per cent of the company’s revenue, Microsoft president and chief legal officer Brad Smith said in January, according to Bloomberg.
Widespread piracy of Windows and Office once prevented the company’s cash cow from bringing in money. The company is now pushing its Azure cloud service to customers in China, via a partnership with local data service provider 21Vianet.
Its crown jewel is arguably a research centre in Beijing, which has produced a number of executives who have gone on to work in senior positions at Alibaba, ByteDance, Xiaomi, and facial recognition unicorns Sensetime and Megvii.
It also was the site of origin for the so-called “ResNet” paper, currently the most-cited AI paper, Reuters reported.
Beijing will not accept an acquisition of TikTok’s US operations by Microsoft, the state-run ‘China Daily’ reported yesterday