Trump’s bid for a piece of Microsoft-tiktok deal could spur legal action

US President Donald Trump’s unprecedented demand that the US get a cut of the proceeds from the forced sale of Chinese internet giant Bytedance’s short-video app Tiktok is based on an interpretation of US law that regulatory lawyers say may be open to challenges.

The Committee on Foreign Investment in the United States (CFIUS), a US government panel that reviews deals for potential national security risks, has given Bytedance until September 15 to negotiate a sale of Tiktok to Microsoft. While CFIUS has never before sought a cut from the proceeds of a divestiture it has ordered, the White House could argue that imposing a fee on Bytedance would deprive it of resources that would otherwise support China’s government on technology initiatives that could harm US interests, some of the legal experts added.

“It’s certainly inconsistent with the intent of Congress... and with CFIUS’ long-standing concern to maintain a reputation for acting apolitically and solely on grounds of national security, but it’s not clear that it's outside the president’s statutory authority,” said Paul Marquardt, a regulatory lawyer at Cleary Gottlieb. The White House, the Treasury Department, Bytedance, and Microsoft did not immediately respond to requests for comment.

US law states that presidential decisions blocking deals on national security grounds are not subject to judicial reviews. However, a legal challenge is possible under the fifth amendment of the US Constitution, which prohibits the government from seizing property without just compensation, as well as other laws, legal experts said.