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Trump Asks Microsoft, ByteDance To Pay US Govt A Cut From TikTok Acquisition Deal

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Trump Asks Microsoft, ByteDance To Pay US Govt A Cut From TikTok Acquisition Deal

President Donald Trump is ready to approve Microsoft Corporation's (NASDAQ: MSFT) purchase of ByteDance’s short-form video app TikTok — but only if the United States government received “a lot of money,” the Wall Street Journal reported Monday.

What Happened

Trump reportedly told the Redmond, Washington-based company's CEO Satya Nadella that, “a very substantial portion of that price is going to have to come into the Treasury of the United States because we’re making it possible for this deal to happen.”

Legal analysts and others told the Journal that such a demand is extraordinary. 

“It is completely unorthodox for a President to propose that the U.S. take a cut of a business deal, especially a deal that he has orchestrated," University of Richmond professor Carl Tobias said, adding that such an idea is also possibly "illegal" and "unethical."

Former Treasury official in the George W. Bush administration, Tony Fratto, noted that irrespective of the president's wishes, Microsoft and TikTok are unlikely to send a check to the U.S. government beyond their regular tax obligations.

Why It Matters

Microsoft is in talks with ByteDance to acquire TikTok and may secure a deal in the range of $40 billion, according to Wedbush analyst Daniel Ives.

Ives said the Redmond company is the only potential “white knight” for the Chinese owned app, which has the approval to buy it. He estimates the value of TikTok could rise up to $200 billion over time.

The software-giant set a September 15 as a deadline for concluding talks with TikTok’s owners and is also looking to acquire the app’s operations in Canada, Australia, and New Zealand.

Price Action

Microsoft shares closed nearly 5.6% higher at $216.54 on Monday and declined by 0.16% in the after-hours session.

Photo courtesy: Gage Skidmore on Flickr

 

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