Trump’s demand for cut of TikTok sale could face legal challenge

The Fifth Amendment could prevent a potential fee attached to Microsoft’s TikTok acquisition

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.”

Featured Resources

Preparing for AI-enabled cyber attacks

MIT technology review insights

Download now

Cloud storage performance analysis

Storage performance and value of the IONOS cloud Compute Engine

Download now

The Forrester Wave: Top security analytics platforms

The 11 providers that matter most and how they stack up

Download now

Harness data to reinvent your organisation

Build a data strategy for the next wave of cloud innovation

Download now

Recommended

Google, Microsoft fight over documents in antitrust lawsuit
Policy & legislation

Google, Microsoft fight over documents in antitrust lawsuit

30 Jul 2021
Senator wants social media companies held liable for spreading anti-vax lies
social media

Senator wants social media companies held liable for spreading anti-vax lies

23 Jul 2021
Microsoft cracks down on sophisticated BEC scam campaign
scams

Microsoft cracks down on sophisticated BEC scam campaign

20 Jul 2021
Security researchers uncover more Print Spooler vulnerabilities
vulnerability

Security researchers uncover more Print Spooler vulnerabilities

19 Jul 2021

Most Popular

RMIT to be first Australian university to implement AWS supercomputing facility
high-performance computing (HPC)

RMIT to be first Australian university to implement AWS supercomputing facility

28 Jul 2021
Samsung Galaxy S21 5G review: A rose-tinted experience
Mobile Phones

Samsung Galaxy S21 5G review: A rose-tinted experience

14 Jul 2021
Zyxel USG Flex 200 review: A timely and effective solution
Security

Zyxel USG Flex 200 review: A timely and effective solution

28 Jul 2021