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President Donald Trump insists that any sale of the TikTok video app includes a cut for the federal government, but that lawsuit has puzzled policy experts and lawyers who say such a payment would extend his authority under US law.
The tariff has emerged as an unusual sideshow in the administration’s effort to pressure China. ByteDance Ltd. to sell TikTok’s US operations to a US owner for national security reasons. Since asking for the sale last month, Trump has repeatedly said that he would like the United States to be “well compensated” for the transaction.
But the law that gives the United States the authority to force the sale of a foreign-owned company on national security grounds does not provide the power to demand the kind of payment Trump is seeking. That has left administration officials looking for a mechanism under the order the president issued demanding that ByteDance divest itself.
Trump’s approach to the transaction “looked a lot like a subprime real estate deal in Manhattan,” said James Lewis, senior vice president of the Center for Strategic and International Studies, a Washington think tank.
“You don’t get a search engine fee in the government,” Lewis said. “Can you pay the government to perform this type of service? It’s just not something that’s ever been done. “
Previously: Trump insists on CompensatesUS action on any TikTok sale
Trump’s lawsuit is not specifically authorized in the law that governs US reviews of foreign acquisitions of US companies, according to lawyers who specialize in such investigations.
Still, it is possible that the administration would impose conditions on the sale that would require a payment to the government, they said, either as compensation for damage to national security or for monitoring the company, said lawyers who asked not to be identified due to the review. . It is underway.
While foreign investors must pay filing fees when seeking approval to buy a US company, they are capped at $ 300,000. That doesn’t appear to be in the range of what Trump wants, considering any asking price is likely to be in the billions.
Another possibility of payment is that the companies reimburse the government for monitoring compliance with the terms imposed on the sale, which would be determined by the Foreign Investment Committee in the United States. That panel, known as Cfius, looks at the national security implications of foreign investments in domestic companies.
Ensuring that TikTok’s business in the United States is completely separate from the rest of the company, for example, could involve a long transition period that requires government oversight.
TikTok, Hong Kong and more hot spots between the US and China: QuickTake
But if Trump tried to force the TikTok buyer to pay an additional fee, he could easily be challenged in court, he said. Geoffrey Gertz, a fellow at the Brookings Institution in Washington who studies trade and foreign investment.
“There are political ways out of this,” he added. “One could be to frame the Cfius filing fees as the payment that Trump demanded.”
It is conceivable that Microsoft Corp. or Oracle Corp., which has submitted offers, could voluntarily hand over a check to the US Treasury to close the sale. ByteDance could pay as well, but that’s considered highly unlikely as the US forced it to sell TikTok in the first place.
Trump’s demand for payment shows he has a “fundamental misunderstanding” of the government’s role, according to Alex Harman, an advocate for competition policy at the watchdog group Public Citizen.
“It is unprecedented to even suggest that there would be a commission for the government,” Harman said. “He is not negotiating a deal. He demands it. “
Microsoft declined to comment. Oracle and Tiktok did not respond to requests for comment. The White House did not immediately respond to a message for comment.
Previously: ByteDance Head Rethinks TikTok Options After New China Rules
Trump reiterated Tuesday his insistence that the United States should be “well compensated,” without explaining his reasoning. His pronouncement came just days after China imposed restrictions on the export of technology used by TikTok, effectively asserting authority over any sale.
Thursday, China again He emphasized his right to approve or block the sale of technology abroad, decreasing the likelihood of a sale occurring as tensions with Americans over trade and other issues mount.
Trump has been demanding money for a sale since he first announced plans to ban the app in early August.
‘Key money’
“I said that a very substantial part of that price will have to go into the US Treasury because we are making it possible for this deal to happen,” Trump said. said on August 3. He referred to what is called “key money,” a real estate term that describes the payment that a prospective apartment tenant pays to the owner or manager of the building, sometimes under the table – to secure a desired lease.
Microsoft pledged in a blog post last month to “bring adequate economic benefits to the United States, including the United States Treasury.” But that language refers to ordinary tax revenue and job creation, Bloomberg has reported.
The US deadline for a TikTok sale has been confusing, making things even more complicated. In an Aug. 6 executive order, Trump threatened to ban TikTok within 45 days, presumably giving ByteDance until Sept. 20 to divest. Then, on August 14, he ordered ByteDance to divest within 90 days, which would extend the time period until after the November 3 US election, or around November 12.
But this week Trump said, “I told you they had until September 15 to make a deal, after that we will close it in this country.”
Read more: TikTok’s latest challenge lies in a Texas court that admits patents
It is unclear if Trump meant that there should be an agreement between ByteDance and the buyer by the 15th or if he wants the sale to be completed by then.
Part of the confusion is due to the fact that there is a debate within the administration itself over the scope and effective date of the ban, which also extends to WeChat, China’s social media app. Tencent Holdings Ltd.
The US Department of Commerce, which will implement the bans, is drafting documents to clarify the specific transactions that will be prohibited between Chinese companies and US companies, and when those bans would take effect, Bloomberg reported. The decisions will be made public in the Federal Register around September 20.
– With the assistance of Josh Wingrove, Jennifer Jacobs, Mario Parker and Saleha Mohsin
