TikTok is forcibly discovering that the Oval Office may have trump cards in operations that pose national security concerns. President Donald Trump pushed for a sale of the popular video app, and then threatened to ban it, prompting a call between him and Microsoft CEO Satya Nadella to save the talks. The seller, the Beijing-based parent company Byte Dance, and other potential buyers have a lot to worry about.
Trump is playing broker in what could be Microsoft’s biggest acquisition since he bought LinkedIn in 2016 for $ 26 billion. After both Reuters and the Wall Street Journal reported the round-trip talks over the weekend, the $ 1.6 trillion company said Sunday it would move on after a direct call with the president.
Foreign ownership of companies or assets in the United States often attracts the attention of the Foreign Investment Committee (CFIUS). That multi-government panel is investigating ByteDance’s purchase of the Lip sync app Musical.ly in 2017, which was merged with TikTok. Most companies don’t bother defending themselves, but on the rare occasions that they do, a whole US president can step in.
That happened in 2012, the only legal challenge to CFIUS since it was established in 1975, when Ralls, a subsidiary of the Chinese group Sany, bought wind farms in Oregon. President Barack Obama not only ordered Ralls to dispose of the wind farms, but also forced her to remove items added to the facility, including concrete foundations, and prohibited employees from accessing the facility. Sany complied.
That operation reaffirmed that the commander in chief has carte blanche on the security risks of mergers and acquisitions. And the Trump administration has meddled multiple times since then. In March, the president required Beijing Shiji Information Technology to sell the hotel management software company StayNTouch.
In 2018, Ant Financial abandoned the $ 1.2 billion purchase of MoneyGram. And the Chinese owner of the dating app Grindr was ordered to sell it three years after buying it in 2016.
This harsh environment has affected other businesses. A banker told Breaking views of two recent cases in which a Chinese company received higher offers from its country’s suitors, but accepted a lower price from a US buyer to avoid CFIUS revisions.
ByteDance is the latest in a long line of Chinese companies that have learned that Uncle Sam is the ultimate poisoned pill.