Trump demands finder’s fee for Microsoft’s Tik-Tok acquisition, setting dark business precedent for US

Trump demands finder’s fee for Microsoft’s Tik-Tok acquisition, setting dark business precedent for US

"The United Sates should be reimbursed or paid something."

PoliticsAugust 04, 2020 By Will Brendza

The saga of Tik-Tok has been a strange and crazy thing to behold over the last few months. And it’s only getting weirder, more dystopian and dysfunctional as Donald Trump climbs deeper into it. Now, he’s trying to assert Landlord-in-chief powers he doesn’t legally have, to extort money from a business deal he has nothing to do with.  

But who’s surprised?

It all started last year, when accusations against Tik-Tok arose suggesting that the popular Gen-X/Gen-Alpha dance and humor video-app, is actually Chinese spy-software and Party propaganda, unduly influencing its 165 million American users.

It's a strange accusation, but it’s not an unfounded one. ByteDance, Tik-Tok’s parent company, works closely with the Chinese government. They have been accused of collaborating to spread Chinese communist party propaganda, as well as smothering content that challenges the People’s Republic in any way shape or form.

Tik-Tok has itself been called out for curating its content: boosting videos of rich and beautiful looking users, while censoring videos of poorer looking and/or uglier users. (No, we’re not making that up.)

Then in June, things got political. American teens and K-poppers mobbed up on Tik-Tok, conniving to buy as many tickets to Trump’s Tulsa rally as possible — hundreds of users pitched in, selling out the event, buying seats that were never filled. That moment (as satisfying as it was to see Trump so crestfallen about his flopped rally) represented Tik-Tok’s first foray into American politics. And, considering the app’s connection with ByteDance (and by association, with the Chinese government) that was somewhat disconcerting …

Which is why Trump recently moved to ban Tik-Tok from operating in the US. Not only were Tik-Tok users using the app to squash his MAGA party, but there was also a legitimate concern over the app’s connection to Chinese surveillance and propaganda operations.

That’s just the beginning, though. This is where things start to get really weird.

Because, last week, Microsoft stepped up to the plate and announced it was engaged in negotiations to purchase Tik-Tok from ByteDance. The move would bring the company into American ownership, Microsoft would make a lot of money and fears of Chinese interreference could be dismissed. It was a win-win situation.

However, it wasn’t enough for Trump, master of the Art of the Deal. At first, he came out opposing the Microsoft’s acquisition outright. A position he later amended — so long as he got to charge Microsoft a “finder’s fee.”

In a phone conversation with Microsoft’s CEO, Satya Nadella, Trump said, a “very substantial portion of the price [for TikTok] is going to have to come into the Treasury of the United States, because we’re making it possible for this deal to happen.”

Trump later expanded on CSPAN, explaining what he meant in real estate terms.

“Right now, [Microsoft doesn’t] have any rights, unless we give it to them. It’s a little bit like the landlord/tenant [relationship] — without a lease, a tenant has nothing. So they pay what’s called key money or they pay something. But the United Sates should be reimbursed or paid something a substantial amount of money,” Trump said.

Yes, that is what it sounds like: extortion. Trump is demanding that Microsoft pay their landlord (ie the Federal Treasury) a cut of their earnings from the Tik-Tok acquisition just because Microsoft is an American company.  

And Microsoft, is apparently ready to bend over and submit to his demands. In a blog post published on August 2nd, Microsoft stated that “it is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.”

Take me, daddy ... take me and have your way with me.

What Trump is doing here is unprecedented. Finders fees may be an essential aspect of the real estate industry, but they have never been applied by the federal government. That’s called taxation. Whatever happened to that age-old Republican creed of reducing taxes at all costs?

“There is zero legal authority for the president to extort money from a company seeking to clear a deal under the laws creating CFIUS,” John Coates, a professor of law at Harvard University, told Market Watch. “Congress has never authorized an executive branch official, or any agency, to condition regulatory approval or clearance on the payment of the ‘cut’ of a deal, a ‘finder’s fee,’ or a bribe. The fact that the money might in theory go into the U.S. Treasury does not make it legal. Congress, and only Congress, can authorize taxes, through legislation.”

So, legally, he’s not even allowed to request this kind of “finder’s fee.” Maybe he would be, if there was some kind of investment stake the government had in this deal, or if there were some contractual rights they had to Tik-Tok or Microsoft — and even then it’s a maybe.

However, Trump doesn’t even have that level of claim to stake in this deal. He’s just needlessly inserting himself into a complicated business transaction he has no businesses being involved in at all.

“That’s not how it works, Mr. President,” said James Lewis, senior vice president at the Center for Strategic and International Studies in Washington. “Of course, we aren’t going to get a cut on the deal. It’s just not how it works. The government doesn’t get cuts from a deal.”