TikTok Sale: Highway Robbery or Willing Buyer-Willing Seller Basis?

Sell your company or we will close you down. And as the Government, we will take a cut of the value of this enforced sale. That’s what Trump perceives as the “Art of the Deal”.

Image: https://www.theguardian.com

President Trump said TikTok will "close down" in the U.S. on September 15 unless a deal can be negotiated between TikTok, a prospective company and the U.S. government. It reflects a concerning moral vacuum... “a 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." Trump said. Commonly described as a kickback, it throws into serious question the moral and legal leadership of the United States. That’s Daryl Guppy’s view.

The world has now become accustomed to President Trump's destruction of the global rules-based order of WTO. But this takes things to a new level and poses a threat, not just to China, but to any company that dares challenge any U.S. competitor. This is state-sponsored property theft built on charges that are trumped up (no pun intended). TikTok, like Huawei, poses a major competitive threat.

Microsoft may not have been party to this business hijack, but it will become a beneficiary of these presidentially-initiated tactics. In this case the kickback goes to the U.S. Treasury, but it does not change the nature of the executive action.

The reaction of other Western powers has been muted, and some, including not surprisingly Australia, have suggested they may follow the U.S. lead. Whilst all are quick to condemn China with allegations of state-sponsored IP theft, these countries are strangely silent on this highway robbery.

Trump described his proposal as similar to a lease between landlord and a tenant. What a load of rubbish! Julian Sanchez, a senior fellow at the Cato Institute said Trump’s “extortion threat” is a “mafia business model”. So much for free market forces!

Similar to tariff policy, no consideration of whether it sets a dangerous precedent for others to behave similarly in their markets. And who will want to invest in the U.S.? Because if you do succeed you could be acquired for national security reasons!

References:

1. The forced sale of TikTok by Trump, Daryl Guppy

2. U.S. TikTok move a “mafia deal”, The Star, 5 August 2020

3. Trump says TikTok sale can go through but only if the U.S. gets a cut, Rishi Iyengar, Oliver Effron and Nikki Carvajal, CNN Business, August 4, 2020