President Donald Trump said he’s told people involved in the sale of the US assets of ByteDance’s TikTok that the deal must be struck by September 15 and the federal government must be “well compensated”, or the service will be shut down.
“I told them they have until September 15 to make a deal – after that we close it up in this country,” Mr Trump told reporters before boarding Air Force One for a trip to Kenosha, Wisconsin. “I said the United States has to be compensated, well compensated.”
It remains unclear how the US would collect compensation from the sale of TikTok, forced by the president’s orders last month that the popular video streaming app represents a national security threat because its parent company is Chinese.
TikTok has become a flashpoint for US tensions with China. Mr Trump has stepped up his attacks on the video app as his administration increases pressure on China ahead of the November presidential election.
China on Friday imposed restrictions on the export of artificial intelligence technologies like speech and text recognition, throwing the potential sale into jeopardy. The restrictions are likely to make it harder for ByteDance to get government approval for any deal.
Mr Trump believes that the US deserves a payback for having to resolve the national security threat posed by TikTok and the administration is looking at ways to extract a settlement from any deal that’s struck, according to a source.
Microsoft has teamed up with Walmart to bid for TikTok’s US assets and they’re vying against a competing offer from Oracle.
White House staff have looked at collecting the money from compliance costs, a source said.
The US assesses fees associated with deals under review by the Committee on Foreign Investment in the United States, or CFIUS, which investigates overseas acquisitions of US businesses. But those charges – set on a sliding scale and no higher than $300,000 – appear to fall short of what Mr Trump has demanded.
Microsoft committed in a blog post to “providing proper economic benefits to the United States, including the United States Treasury”. But that language referred to ordinary tax revenue and job creation, a source said.
Now ByteDance founder Zhang Yiming is reconsidering his options and weighing the implications of Beijing’s involvement. The company’s regulatory team and deal negotiators are huddling to discuss whether it’s still possible to craft a sale that can win approval from both governments, an acquirer, venture investors and ByteDance itself.
Mr Trump has the authority under US law to block foreign acquisitions of American businesses on national security grounds. The administration’s order requiring the TikTok sale stems from ByteDance’s 2017 acquisition of Musical.ly, which operated in the US and was merged with TikTok.
On August 14, Mr Trump ordered ByteDance to sell TikTok in the US within 90 days, citing risks to American national security. That followed an August 6 order effectively banning the app in the US within 45 days. TikTok has sued the administration to block the ban, arguing the move is unconstitutional and was driven by politics.
The order on the ban cited China’s access to data collected from the app, including location and browsing data. TikTok, a platform for creating and sharing short videos, has grown rapidly in the US from about 11 million monthly active users in January 2018 to 100 million today, according to the company. Global usage has risen to almost 2 billion from 55 million in January 2018, it said.
“This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information – potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage,” the order said.
