The Trump administration is set to receive a massive payment tied to the recent deal that transferred control of TikTok’s U.S. operations to a group of American and international investors. The payment reportedly comes as compensation for brokering the arrangement that allowed the social media platform to continue operating in the United States while addressing security concerns raised by lawmakers.
The Wall Street Journal reports that the administration expects roughly $10 billion from investors involved in the transaction. According to those reports, the investors include Oracle, private equity firm Silver Lake, and Abu Dhabi investor MGX, all of whom backed the effort to take control of TikTok’s American business from its Chinese parent company ByteDance.
The agreement already delivered an initial payment of about $2.5 billion to the U.S. Treasury when the deal closed on January 22. Investors will send the remaining amount in several installments until the total reaches the expected $10 billion. The payment stands out because governments rarely collect fees tied directly to arranging private business deals.
A Deal Worth $14 Billion
The TikTok transaction valued the new U.S. entity that runs the platform at around $14 billion. If the reported payment reaches $10 billion, the administration’s share represents more than 70 percent of the deal’s total value. Analysts say that the percentage stands far above the typical fees associated with corporate transactions.
The agreement also allows ByteDance to remain involved through a licensing arrangement that lets the new company use TikTok’s core recommendation algorithm. ByteDance still holds nearly 20 percent ownership in the U.S. operation and will share in profits generated by the platform.
Officials inside the administration argue the fee reflects the government’s role in negotiating the deal and resolving long running security concerns related to TikTok’s ownership. Lawmakers had pushed for action because of fears that a Chinese controlled company could access sensitive user data belonging to millions of Americans.
