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Microsoft Needs To Pay A Part To US Treasury For TikTok Deal, says Trump

President Donald Trump said Monday that it could be easier if Microsoft were to buy Chinese-owned TikTok in its entirety, rather than a small part of the social video app, because the name would be split across two companies, and suggested the company should pay the U.S. Treasury as part of the deal.

What Trump Said?

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.

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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 be paid a substantial amount of money, because without the United States they don’t have anything, at least having to do with the 30%.”

Why Is The Us Treasury To Get A Treat?

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 the 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.

History and Future Of Microsoft’s Key Acquisitions

Microsoft’s largest acquisition to date is the 2016 acquisition of business social network LinkedIn, at $27 billion. Investors of the privately owned ByteDance, the Chinese company that owns TikTok, valued TikTok at $50 billion, Reuters reported last week.

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

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.

Why’s TikTok A Hot Topic?

The rise of TikTok has been part of ongoing U.S. government concerns about China that 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.”

Synopsis

  • A deal that Trump describes could be more expensive for Microsoft than the one the company described in a statement on Sunday.
  • Trump said Monday he would like to see the app banned in the U.S. if it’s not bought by Sept. 15.
  • Microsoft to pay ‘Key Money’ to the Us Treasury, says Trump. It is because the deal is made possible only if US puts a pause on the TikTok Ban.
Shaheer Ansari

Shaheer is passionate about living a life seeking un-ending knowledge, philomath, as you may think of him. He's a student of Finance and a keen observer of Business and Indian-Political scenario who takes pleasure to pen down his views and opinions on the same. As his guiding mantra to life, ‘Come what may , life goes on’ helps.

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