As It Happens·Q&A

Trump's demand for cut of TikTok deal is almost 'Mafia-like,' says tech reporter

U.S. President Donald Trump's threat to ban TikTok unless it finds a U.S. buyer and gives American taxpayers a cut of the sale "feels a little bit like extortion," says tech reporter Charlotte Jee.

Charlotte Jee says it's very unusual for a president to get this involved in a private business deal

U.S. President Donald Trump says the U.S. Treasury should get a 'substantial' chunk of any deal by a U.S. tech company to buy Chinese social media app TikTok. (Alex Brandon/The Associated Press)

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U.S. President Donald Trump's threat to ban TikTok unless it finds a U.S. buyer and gives American taxpayers a cut of the sale "feels a little bit like extortion," says tech reporter Charlotte Jee.

TikTok, a hugely popular video-based social media app, is owned by the Chinese company ByteDance. Trump on Monday threatened to ban its use in the U.S. unless it finds a U.S. buyer before Sept. 15.

Trump added that any deal would have to include a "substantial amount of money" for the U.S. Treasury — a demand that legal experts say the president has no authority to make, and which the Chinese government says amounts to theft. 

The U.S. government has repeatedly cited concerns that ByteDance could hand over American TikTok users' data to the Chinese government. Both TikTok and Beijing have denied this. 

Microsoft is currently in talks to buy TikTok's operations in the U.S., Canada, Australia, and New Zealand. The app has more than 100 million U.S. users, and has been downloaded two billion times worldwide, according to market research firm Sensor Tower.

Jee, a reporter with MIT's Technology Review, spoke to As It Happens guest host Susan Bonner about the potential deal and the president's comments. Here is part of their conversation. 

President Trump says TikTok should pay the U.S. Treasury a "substantial portion" of its sale to an American firm. How unusual is that demand?

It's extremely unusual. I mean, I don't think that we've ever seen a president get this directly involved in business affairs.

He has certainly waded into previous business dealings, but never on this level where he is essentially kind of saying: I'm going to ban this company unless they can be bought by an American company — which feels a little bit like extortion.

Is it even legal?

That is a really good question, and I've been asking myself the same question. I'm not sure that it is, because I don't know exactly how they would enforce a ban. I imagine that they will have some lawyers looking at that right now. But it's not clear to me that it is legal.

A Chinese state media outlet is calling the U.S. 'a rogue country.' The rebuke follows comments by President Donald Trump about Microsoft's interest in buying the popular Chinese video-sharing app. 5:00

President Trump has suggested that the need for TikTok to be owned by an American company comes from the fear that the app is giving personal data from Americans to the Chinese government. What evidence is there that Americans' privacy might be compromised?

Americans' privacy is being compromised by TikTok to the extent that it is collecting data about them when they download the app from their phones. But it's being no more compromised than it is by Facebook. 

The question that we really have to zoom in on is whether or not there's data being sent to China. And I don't see any evidence that is happening. TikTok doesn't operate in China. It's owned by a Chinese company, but it's separately owned in the rest of the world. So it's not directly being run out of China. It doesn't have servers in China. So it doesn't store any data on U.S. citizens in China. So I don't see the mechanism through which it is alleged to be happening. We have not been presented with any evidence that it is happening.

How much do you believe this is connected to the contretemps that's going on between China and the U.S. right now?

I think that's absolutely what it comes down to. I think it's basically a ratcheting up of the pressure of the trade war between the U.S. and China.

I think that it partly is because, you know, TikTok is the first major app that's become wildly popular in America that isn't made by an American company. And I think it taps into some American insecurities around an app that doesn't come from their shores doing very, very well.

And I think the fact it's Chinese is another layer, given the degree of anti-China sentiment that there seems to be floating about in the White House right now.

Microsoft seems interested in buying. Does it look like this deal will go ahead?

A lot can change in 45 days, which is how long they have to hammer out a deal. I'm sure that Microsoft is really interested. Apparently, Apple is interested, too. I mean, frankly, I think that most big tech companies would be interested, because TikTok's got a huge, growing audience, and they're a young audience as well.

[Editor's Note: Apple Inc. said Tuesday it has no interest in acquiring TikTok, denying a report by news website Axios from earlier in the day.]

TikTok has more than 100 million U.S. users. (Dado Ruvic/Reuters)

The state-run China Daily newspaper has said that Beijing would not accept the "theft" of a Chinese technology company, and it warned of retaliation. What might that look like?

China has certainly ramped up the rhetoric, but it hasn't really taken much of the sort of reciprocal action that it's been threatening when it comes to things like, you know, Huawei being banned in the U.S. We haven't actually seen much of a repercussion.

There aren't that many big U.S. tech companies in China now anyway. You know, Google, Facebook and so on, a lot of their services are banned there.

But to be clear ... I hate to say this because, you know, there are lots of issues with China and its government, but on this one, they kind of have a point. It does feel like one of the companies that a Chinese entity has set up is kind of being extorted and taken away from them in a slightly bullying, Mafia-like manner.

How much of this is really about a business deal and how much of this is about presidential bluster?

I think it's all about presidential bluster. I really do.

I think that Microsoft has to tread so carefully here, because if they put themselves up as having gained TikTok through Donald Trump doing them a favour, that would look really bad. 

Like I said before, I think a lot could change in the next few weeks. Trump may get bored and he may just move on to his next target.

What about TikTok users themselves? This is a popular app. How worried should devotees be that they might lose the app they love?

I think that there are lots of teens who are very scared in the U.S. right now. And, you know, in some ways I really feel for them because, much as the older generations may struggle to understand this, TikTok has been a huge tonic for them during a very difficult time, in a very trying few months. So I think there's a lot of fear and a lot of anger about the potential for that to be taken away from them.

I would say people shouldn't really panic yet. We don't have anything concrete at the moment. It is mostly bluster. I know that obviously Microsoft is looking at buying them, but I would be really surprised if TikTok is fully banned in the U.S., ceases to exist operating there. I think, and I don't know exactly how this will happen, but I really can't see it completely disappearing.


Written by Sheena Goodyear. Interview produced by Kate Swoger. Q&A has been edited for length and clarity. 

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