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

Shining light on new 'cool' cloud technologies and their drawbacks

IONOS Cloud Up! Summit, Cloud Technology Session with Russell Barley

Watch now

Build mobile and web apps faster

Three proven tips to accelerate modern app development

Free download

Reduce the carbon footprint of IT operations up to 88%

A carbon reduction opportunity

Free Download

Comparing serverless and server-based technologies

Determining the total cost of ownership

Free download

Recommended

Microsoft hit with formal complaint over "monopolistic" software bundling
collaboration

Microsoft hit with formal complaint over "monopolistic" software bundling

29 Nov 2021
Gmail vs Outlook.com: Which one is better?
email providers

Gmail vs Outlook.com: Which one is better?

26 Nov 2021
Business customers can get 30% off the Surface Laptop Go for Black Friday 2021
Laptops

Business customers can get 30% off the Surface Laptop Go for Black Friday 2021

26 Nov 2021
Hackers use SquirrelWaffle malware to hack Exchange servers in new campaign
malware

Hackers use SquirrelWaffle malware to hack Exchange servers in new campaign

22 Nov 2021

Most Popular

How to move Microsoft's Windows 11 from a hard drive to an SSD
Microsoft Windows

How to move Microsoft's Windows 11 from a hard drive to an SSD

24 Nov 2021
What should you really be asking about your remote access software?
Sponsored

What should you really be asking about your remote access software?

17 Nov 2021
Nike to take customers into the metaverse with 'NIKELAND'
virtualisation

Nike to take customers into the metaverse with 'NIKELAND'

19 Nov 2021