Trump says Microsoft should pay ‘key money’ to Treasury for facilitating TikTok deal

Tech

President Donald J. Trump stops to talk to reporters as he walks to board Marine One and depart from the South Lawn at the White House in Washington on July 31, 2020.

Jabin Botsford | The Washington Post | Getty Images)

President Donald Trump said Monday that it could be easier if Microsoft were to buy China-owned TikTok in its entirety, rather than a small part of the social video app, because the name would be split across two companies.

“I think buying 30% is complicated, and I suggested that he can go ahead, he can try,” Trump told reporters in the Cabinet Room at the White House on Monday. He was referring to his conversation over the weekend with Microsoft CEO Satya Nadella. The comments come a day after Microsoft confirmed in a statement that it has looked at buying TikTok in the U.S., Canada, Australia, and New Zealand.

A larger deal could go beyond resolving the U.S. government’s concern over Chinese control of the app, where hundreds of millions of people share short videos that often feature music.

A transaction of the type President envisions could also prove more expensive than the one Microsoft described on Sunday. Trump said Monday that part of the amount paid to buy TikTok would have to come to the U.S. Treasury Department because it would be making the deal possible.

“It’s a little bit like the landlord/tenant, without a lease the tenant has nothing, so they pay what’s called ‘key money,’ or they pay something,” Trump said. “But the United States should be reimbursed or should paid a substantial amount of money, because without the United States they don’t have anything, at least having to do with the 30%.”

Microsoft’s largest acquisition to date is the 2016 acquisition of business social network LinkedIn, at $27 billion. ByteDance investors valued TikTok at $50 billion, Reuters reported last week.

The app will be banned in the U.S. if it’s not sold by September 15, Trump said on Monday. On Sunday, Microsoft had said that it wants to conclude talks with ByteDance, the Chinese company that owns ByteDance, by September 15.

“We believe from a management and board perspective this is a unique deal of a decade opportunity with a price tag that could easily be consummated,” Wedbush analysts led by Dan Ives, who has the equivalent of a buy rating on Microsoft stock, wrote in a note distributed to clients on Monday. Microsoft had $136.53 billion cash, equivalents and short-term investments as of June 30, according to the company’s most recent quarterly earnings report.

Microsoft shares were up more than 5% during Monday’s trading session, which was mostly positive for tech stocks overall.

The rise of TikTok has been part of ongoing U.S. government concerns about China, which previously prompted a trade war. Trump Administration officials have argued that TikTok delivers user information to the Chinese Communist Party. TikTok has said “TikTok U.S. user data is stored in the U.S.”

— CNBC’s Steve Kopack contributed to this report.

WATCH: How Microsoft could benefit from buying TikTok

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