All the Problems With Trump's TikTok Fee
The president floats the idea that
the government should get a cut of any TikTok deal, which is just beyond belief.
It’s actually
difficult to believe that the President of the United States would inject
himself (no pun intended) into the middle of the Microsoft/TikTok discussions,
and then demand that a “substantial amount of money” be paid to the U.S.
Treasury from whatever agreement might result, as a condition of the
government’s acquiescence in any prospective deal.
Trump’s lifelong mindset is that he and his businesses should
get a “piece” of every deal, deservedly or not. Now he’s dragging the
federal government down to his grifter level. His sophomoric “key money” analogy to a landlord/tenant
relationship is especially telling. Throughout his shabby real estate
career it was always about using leverage to take advantage of the other
parties - renege on commitments - stiff vendors and partners - and basically do
whatever was solely in his own interest.
Say what you will
about the lip service to security concerns, the clear message now is that you
can buy anything you want from this government, for the right price. And to be
very clear, if Trump even understood what he was saying, it’s pretty obvious
that he wasn’t talking about traditional taxes, capital gains or even tariffs.
He was talking about extorting the parties to the deal to pay the government a
bunch of money so the deal would be allowed. The message is that federal
approval is for sale-; just like everything else in this
administration.
Frankly, it was stupid of Microsoft to reach out to Trump and involve him in the process. Now the company, not to mention our
country’s international image, is paying the price. The old rule is that
if you teach a bear to dance, you'd better be prepared to keep dancing until
the bear wants to stop. Microsoft CEO Satya Nadella foolishly invited this
guy to the party and now he won’t leave without his piece of the
action.
Although, in fact, we
really don’t know who is supposed to actually come up with the payoff. While
Trump insists that he would expect someone to pay the “very large percentage”
of the purchase price to the United States Treasury, that’s about the extent of
the thought that seems to have entered into this discussion thus far. As usual,
it’s shoot from the hip, then try to back off the obvious errors and have your
people attempt to clean up the confusion and the resulting mess. This is a
helluva way to run a railroad.
And for hundreds of other tech businesses engaged in global
conversations, arrangements, contracts, partnerships, etc., it muddies the
waters and raises new obstacles and problems galore. Trump’s declaration that TikTok has no rights in the U.S. unless he gives
them is akin to
telling the rest of the world it needs his permission to do business in the
U.S. and that he can withdraw that consent at any time. This is no longer any
rule of contract law, or standard business protocols - it’s a rule by fiat and
by impulse and emotion. And no one really knows what the rules will be down the
line.
Microsoft is
theoretically buying the TikTok assets - not selling them - so is Trump saying
that Microsoft also has to pay a premium over and above the payments to TikTok
to the Treasury as a deal fee? Or is he saying that TikTok-; which isn’t
technically subject to any U.S. jurisdiction from a financial standpoint -
would have to pay some large portion of the purchase price to the Treasury for
no apparent reason? And, just for laughs, who is going to determine these
amounts and in what forum, and who will be negotiating with the parties? Will
some government agency now be a part of every global contract conversation or -
worse yet - waiting in the wings to jump in and interfere with the negotiations
if and when it pleases? Capitalism can’t operate this way; at least
not for long.
For centuries,
businesses have required and depended on certain degrees of trust,
predictability, and comfort in the laws that govern contracts and other
transactions - especially internationally. That’s ever more so in today’s
global economy. This latest farce is just another Trump nail in the coffin of
America’s reputation and integrity. And it risks far more in the long term than
simply the consummation of a single deal.