Trump seeks cut of Microsoft deal to acquire TikTok

Donald Trump has abandoned his opposition to Microsoft buying TikTok’s American operations, but now wants a cut of the deal for the US Treasury in exchange for approving an acquisition of the Chinese-owned video app.

The US president said he had relayed the demand for a “very large percentage” of the purchase price to Satya Nadella when he spoke to the chief executive of Microsoft in a phone call at the weekend.

“The US should get a very large percentage of that price, because we’re making it possible,” Mr Trump said at a press conference on Monday. “It would come from the sale, which nobody else would be thinking about but me, but that’s the way I think, and I think it’s very fair.”

Mr Trump suggested the payment could come from Microsoft, or any other US company that bought TikTok, or the Chinese seller. But the White House refused to say how the administration could force either one of the parties to pay the Treasury, or how such an unheard-of mechanism would work.

The request for payment added another complication to the acquisition talks, which were whipsawed by his stated opposition on Friday to the US tech group buying TikTok, which is owned by China’s ByteDance.

Although Mr Trump’s green light to Microsoft is a significant U-turn, he said it came with a deadline: Microsoft or any other US suitor must complete a deal by September 15 or the White House would ban TikTok for American users.

“I don’t mind whether it is Microsoft or somebody else . . . a very American company,” Mr Trump said. “I set a date of around September 15 at which point it’s going to be out of business in the US.”

While Mr Trump did not expand on how he would secure a percentage of the deal for the Treasury, Microsoft at the weekend signalled it was weighing how to meet the request. In a blog post after the call between Mr Nadella and Mr Trump, it said it was committed to “providing proper economic benefits to the United States, including the United States Treasury”. Microsoft declined to comment beyond Sunday’s blog post.

Mr Trump likened the payment to “key money”, cash paid to a landlord or building manager by a prospective tenant in order to secure a lease.

“Right now they don’t have any rights, unless we give it to them . . . It’s a little bit like the landlord-tenant. Without a lease the tenant has nothing,” said Mr Trump, a former New York real estate developer.

Speculation had mounted in recent days that Mr Trump would sign an order banning TikTok, but his comments gave the app a temporary reprieve. The deadline he has now put on the talks will add pressure on both parties to hammer out the technical details of a complex deal.

US officials have been concerned that China gathers sensitive data on American citizens through tech companies. Earlier this year, Chinese company Kunlun was forced to divest the gay dating app Grindr to investor group San Vicente Acquisition, after an intervention by Cfius, the US government panel that vets acquisitions for possible security concerns. 

In addition to questions about price — which had yet to be determined, according to people involved — it remains unclear how ByteDance would carve out its US operations from its European and Asian arms. It is also not clear how ByteDance’s existing investors would respond to a deal.

Mr Trump said he had suggested that Microsoft buy a 100 per cent stake in the operation, rather than a part of the business.

“It’s probably easier to buy the whole thing rather than 30 per cent,” Mr Trump said without providing any detail.

Mr Trump’s changing position appeared to reflect the running White House policy debate over China, which has included divisions on how to clamp down on security threats from Beijing.

It came despite public accusations by Peter Navarro, a top White House official and leading China hawk, that Microsoft was “enabling censorship” in China. In Monday television appearances, Mr Navarro also made allegations of “suspicious stuff going on” between Microsoft and the Chinese Communist party, without elaborating.

Mr Navarro has long spoken out against TikTok’s presence in the US, accusing the app last month of sending American user data to the Chinese Communist party to enable “blackmail and extortion” or “information warfare”. He has frequently faced internal opposition to his hardline stances from other Trump aides, including Steven Mnuchin, the Treasury secretary.

Microsoft, which has had a presence in China for nearly 30 years, including its largest R&D centre outside of the US, is regarded as a trusted partner by Beijing. It also counts Zhang Yiming, ByteDance’s founder, as an alumnus. 

Follow Demetri Sevastopulo on Twitter: @dimi

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