Show all

Trump pushes his business favorites in TikTok quest

For a guy who has pushed massive deregulation, President Trump certainly likes to insert himself into the business world on a granular basis.

He ridicules Amazon’s CEO Jeff Bezos as “Jeff Bozo” and threatens the company’s contracts with the federal government — not because Amazon does a poor job, but because Bezos owns The Washington Post, a frequent agitant of the White House.

He denounced AT&T’s purchase of Time Warner because the deal involved another Trump critic, CNN. His Justice Department even conjured up an antitrust case to break up the deal, although the case ultimately failed in court.

These are just a couple of examples of Trump’s attempts to make the personal political. But he may be outdoing himself with what’s going on with TikTok — and it’s hurting his case that the wildly popular but controversial short-video app needs to be married with a US company.

First, if you don’t know what TikTok is, I don’t blame you; I didn’t know either until I started covering the Trump administration’s threats to ban the app from the US unless it found an American buyer and removed any possibility that user data is being shared with China’s government. (TikTok is owned by the Bejing-based ByteDance.)

TikTok is big with kids (a lot lip-syncing of rap songs). You can find some political commentary and, of course, Trump impersonations by comedian Sarah Cooper. But it’s also big with influencers, or people who can get young people to do stuff and buy things — which is why several companies are now looking to buy the app before the ban goes into effect next month.

Microsoft is one of those companies, and it has the strongest hand to buy TikTok’s US operations, which boasts nearly 100 million monthly users. The Seattle company’s cloud expertise is among the best in the business, and it has the money ($137 billion in cash) as well as a clean balance sheet to pay the estimated $20 billion to $50 billion for the assets.

Moreover, ByteDance CEO Zhang Yiming is said to be on board (he is said to be friendly with Microsoft CEO Satya Nadella, above left), as initially was the Treasury Department, which chairs the all-important US interagency Committee on Foreign Investment in the United States (CFIUS), which needs to approve the transaction.

ByteDance CEO Zhang YimingByteDance CEO Zhang YimingVisual China Group via Getty Images

But nothing is simple in Trump world.

As Microsoft engaged in deep negotiations with ByteDance, things started to get weird. Trump said any deal would be conditioned on the US government being compensated with a “a lot of money. A lot of money.” Sounds like extortion to me, since any deal needs administration approval. As Columbia law professor John Coffee put it: “If there is a valid reason . . . for keeping TikTok out of the US, payment of money to waive this objection only aggravates the problem.”

Then reports surfaced that tech giant Oracle had joined the bidding — an odd move for a company with little direct-to-consumer experience and a much smaller balance sheet than ­Microsoft.

In normal deal making, Oracle would have to put up more money than Microsoft or show it has better technological expertise in its cloud-computing business to secure the US user data. But Oracle didn’t need to show anything to get its blessing from the commander in chief because the company is run by Trump supporter Larry Ellison, who immediately drew praise from Trump as a “tremendous person. I think that Oracle would be certainly somebody that could handle it.”

What makes Trump think Oracle can “handle” a transaction that would cost anywhere from$20 billion to $50 billion depending on how many TikTok assets are sold? Oracle has only $43 billion of cash and cash equivalents and it has never been involved in consumer social media; Microsoft has LinkedIn and Xbox.

Can’t be size. Oracle has a market value of $176 billion, while Microsoft has $1.73 trillion.

Any deal could be announced even as this column is published, and who knows, Microsoft may just walk away from this insanity — part of me thinks it still will — and let Larry Ellison come up with all that cash to run a business he knows little about.

Comments are closed.