This week, President Donald Trump demanded the U.S. receive a cut of the proceeds from the forced sale of TikTok. President Trump’s demand is based on an interpretation of U.S law that, according to regulatory lawyers, may be open to challenges.
Microsoft is in talks to purchase TikTok in North America, Australia and New Zealand. The Committee on Foreign Investment in the United States (CFIUS) has given ByteDance, TikTok’s Chinese parent company, until Sept. 15 to negotiate the sale amid user privacy concerns.
Though TikTok’s price remains uncertain, ByteDance executives reportedly value TikTok at more than $50 billion.
On Monday, President Trump told reporters, “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 experts argue that while CFIUS has never attempted to collect a share of the proceeds from a divestiture it’s ordered, the White House could argue that imposing such a fee on ByteDance may deprive the Chinese government of resources it needs to pursue technology initiatives that could harm U.S. interests.
Paul Marquardt, a regulatory lawyer at Cleary Gottlieb, added, “It’s certainly inconsistent with the intent of Congress ... and with CFIUS’s long-standing concern to maintain a reputation for acting apolitically and solely on grounds of national security, but it’s not clear that it’s outside the president’s statutory authority.”
A legal challenge is possible, though. The Fifth Amendment of the U.S. Constitution prevents the government from seizing property without providing fair compensation. According to legal experts, this could be used to challenge any fee.
It’s unclear whether or not President Trump will follow through with his demands. During an interview with Fox Business News on Tuesday, White House economic adviser Larry Kudlow stated, “I’m not sure it’s a specific concept that will be followed through.”
