Trump says TikTok must sell US unit by Sept 15 or close it

He also says federal govt to be paid sum equal to percentage of sale for making deal possible

Microsoft said that it was aiming to complete a deal for TikTok's operations in the US, as well as in Canada, Australia and New Zealand. PHOTO: AFP

WASHINGTON • President Donald Trump said TikTok will have to close in the US by Sept 15 - unless there is a deal to sell the social network's domestic operations to Microsoft or another American firm.

He also said the federal government will have to be paid an amount equal to a percentage of the deal, "whether it's Microsoft or somebody else or it was Chinese". But it was not clear under what authority he can extract a payout.

It would be unprecedented, based on recent history, for the US government to collect a cut of a transaction involving companies in which it does not hold a stake.

"The United States should get a very large percentage of that price, because we're making it possible," Mr Trump told reporters at a news conference on Monday evening.

"Whatever the number is, it would come from the sale, which nobody else would be thinking out but me, but that's the way I think. And I think it's very fair," he said.

Mr Trump set off a furious scramble over the fate of the Chinese-owned app last Friday, when he said he would ban the company's operations through an executive action the next day. But the weekend passed without any official move from the White House, after Mr Trump spoke with Microsoft chief executive Satya Nadella about his company's efforts to purchase the viral video application.

Microsoft said in a blog post that it was aiming to complete a deal for TikTok's operations in the US, as well as in Canada, Australia and New Zealand, no later than Sept 15.

The White House had insisted on that deadline, according to people familiar with the matter.

It could prove an uphill climb, with key details for the deal - including price - still not worked out, people familiar with the discussions said.

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Microsoft's blog post also said it is committed to "providing proper economic benefits to the United States, including the United States Treasury".

That language referred to tax revenue and job creation, according to a person familiar with the matter - rather than some sort of special transaction fee.

Mr Trump compared the arrangement to landlord-tenant dynamics.

"Without the lease, the tenant doesn't have the value," he said. "Well, we're sort of in a certain way the lease. We make it possible to have this great success."

The US assesses fees associated with deals under review by the Committee on Foreign Investment in the US, or CFIUS, which investigates overseas acquisitions of American businesses.

But those charges - set on a sliding scale and going no higher than US$300,000 (S$413,000) - did not fit what Mr Trump described.

CFIUS has been reviewing ByteDance's 2017 purchase of the lip-synching app that was later folded into TikTok.

The White House has said it is concerned that ByteDance could be compelled to hand over American users' data to Beijing or use the app to influence the 165 million Americans, and more than 2 billion users globally, who have downloaded it.

Mr Trump has looked to ratchet up pressure on China ahead of November's presidential election, frustrated by slow implementation of the trade pact inked earlier this year and the spread of the coronavirus for which he blames China.

By going after TikTok, Washington is expanding a fight against Beijing using Chinese-style restrictions on tech companies in a move that could potentially have enormous ramifications for the world's biggest economies.

The Trump administration's threat to ban ByteDance's viral teen phenomenon and other Chinese-owned apps could significantly hamper their access to global user data, which is an immensely valuable resource in a modern Internet economy.

"This sets a dangerous precedent for the US," said Ms Samm Sacks, a fellow on cyber-security policy and China digital economy at the New America think-tank.

"We are moving down a path of techno-nationalism."

Washington's moves underscore how quickly the concept of an Internet decoupling is becoming a reality, even as the world is still figuring out its consequences.


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A version of this article appeared in the print edition of The Straits Times on August 05, 2020, with the headline Trump says TikTok must sell US unit by Sept 15 or close it. Subscribe