WASHINGTON – If he were still running casinos in the rough and tumble Atlantic City, NJ, President Trump’s question about Microsoft’s possible acquisition of TikTok would be translated this way: I want a piece of the action.
In exchange for blessing Microsoft’s purchase of the Chinese-owned social media platform, Mr. Trump said the U.S. Treasury should receive a “very large portion” of the sale price. If he did so, it would signal an attempt to play a whole new role for the federal government in exercising its power to approve matters or to stop with national security considerations.
In essence, the president promises to orchestrate the kind of pay-to-play guarantee that the United States prohibits companies from making to other governments under the Foreign Corrupt Practices Act.
And he plays a role that is common among the autocratic leaders he has often praised: use the bare power of his office to influence the private market without clear legal or regulatory authority.
‘It’s protection money. That’s not what the United States government should do, ‘said Avery Gardiner, the attorney general for the Center for Democracy & Technology, a nonprofit organization focused on digital rights, privacy and the Internet.
“It’s scary to think that it can apply in some parts of the business and not in others,” she added. “It becomes a special tax if your company is involved in social media. but you can only do the deal if you pay the protection fee. That’s even worse. ”
Numerous legal experts said they were aware of no provision in U.S. law that could force the president, like anyone else in government, into two private companies to make a substantial payment for a merger or a to pursue purchase.
And even the president’s top economic adviser dismissed the idea, admitting it was not well thought out.
“I do not know if that is an important stipulation,” Larry Kudlow, the director of the National Economic Council, told reporters this week. ‘It may be that the president thought, because the treasury had to work so hard on this, there are many options here. I’m not sure it’s a specific concept that will be followed. “
But for Mr. Trump – who has repeated his question no less than four times in the last 10 days – the instinct fits a long-standing pattern of behavior that has always challenged his normal customary free-market philosophy.
The president is advising or inflating companies with his Twitter feed, looking for interference in the free market. He maintains his office as an economic umbrella, threatens tariffs for both friend and foe, and demands that government contracts be renegotiated. And he often mumbles aloud about a presidency in which he can run the world as he runs his business – without the protections established by law, regulation, customs or norms.
“Very simple,” he told reporters this week about his approach to a TikTok deal. ‘I mean, we have all the tickets, because without us you could not come to the United States. It’s like you’re a landlord, and you have a tenant. The tenant’s business needs a rental; it needs a lease. And what I told them was, ‘Whatever the price, a very large portion of that price should go to the United States treasury. ”
Mr Trump added: ‘And they understood that. And in fact, they agreed with me. I mean, I think they totally agreed with me. ”
A Microsoft spokesman declined to comment. But in a statement issued last Sunday, the company made a vague promise that it was committed to “providing appropriate economic benefits to the United States, including the United States Treasury.”
If Microsoft ends up buying TikTok, as part of its business, the combined company would be subject to existing laws that could increase local and federal tax revenue. The company could promise to bring additional jobs to the United States, which could increase economic activity and generate revenue. And there are small filing costs associated with the national security review that the two companies are undergoing.
Legal experts said that there is also no law that explicitly prohibits companies from voluntarily offering a gift to the government, as long as it is not made under unrest and the gift does not benefit certain individual officials of the government.
But they also warn that extraction of a large sum of money as a condition of a TikTok sale would undermine the integrity of a legal process that works to specific, objective standards. That could set up a president that hinders similar deals in the future by adding uncertainty to the chances of any major business deal.
That turns out to be exactly what Mr. Trump wants to.
The federal government has played a role in a potential settlement between Microsoft and TikTok because of concerns that the video card in China could pose a national security threat by leaking personal information about U.S. citizens to the Chinese government.
In an executive order issued late Thursday, Mr. Trump banned the app from operating in the United States, but said the ban would take effect in 45 days, apparently to give Microsoft time to explore a possible purchase. .
“This data collection threatens to give the Chinese Communist Party access to personal and proprietary information of Americans – possibly China could track down the locations of federal employees and contractors, build files of personal information for extortion and corporate espionage,” he said. Trump said in order.
These concerns have also prompted a review by a special government panel investigating national security threats, the Committee on Foreign Investment in the United States, also called the CFIUS.
In the past, the commission has required companies to take tangible steps to reduce the risk that their products or services could threaten the security of the United States. But experts in the process said there were no provisions in the law that would justify Mr. Trump demanding a sum of money to reduce security issues.
The review process has no mechanism, they said, for “site payments”, however, marked as a condition of a sale to Microsoft. Several said the naked proposal could limit foreign investment in the United States.
“It would be detrimental to the process,” said Aimen Mir, a former deputy secretary of investment security at the Treasury Department. “One of the strengths of CFIUS, in the eyes of investors and companies from allied nations that are sometimes the subject of CFIUS orders or mitigation agreements, is clarity that CFIUS focuses on national security and national security only.”
It is unclear how Mr. Trump got the idea of a sum of money in the first place.
Some of the president’s advisers have objected to the potential sale of TikTok to a US company such as Microsoft in part, as such a deal would end in US dollars to China. Why should China pay to pose a security threat to the United States?
To Mr. Trump, once the negotiator, that turned out to be a simple solution to that problem: The United States would also demand its cuts.
“The president is using the power of the federal government against individual companies in ways that are different than ever before,” Ms. Gardiner said. “It is very anti-democratic.”
