Now Reading: American TikTok Investors Forced to Pay $10B to the US
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American TikTok Investors Forced to Pay $10B to the US
Photo Credit: Solen Feyissa
Investors in TikTok’s US business will pay the Trump administration around $10 billion for the privilege of gaining control of the lucrative platform.
The Trump administration is set to receive around $10 billion from investors in the deal to take control of TikTok’s U.S. business, including Oracle, Silver Lake, and Abu Dhabi investor MGX.
The payment is part of the agreement through which the coalition of investors gained control of TikTok’s U.S. operations from Chinese parent company ByteDance. This money comes in addition to the investments made to create the new entity through which to run the platform in the United States, those familiar with the matter said.
These investors include cloud solutions company Oracle, private equity firm Silver Lake, and Abu Dhabi’s MGX. Together, they and other investors paid the U.S. Treasury approximately $2.5 billion when the deal closed in January, and will be making several additional payments until reaching the $10 billion mark.
The payment would be a nearly unprecedented amount for a government helping arrange a transaction, according to political historians. At the time the deal had been announced but had not yet been completed, VP JD Vance said the new TikTok entity in the U.S. would be valued at around $14 billion, which analysts have called a substantial undervaluation.
Moreover, the U.S. entity is required to share profits with ByteDance as part of the agreement, based on the Beijing company having licensed its algorithm to the new venture. ByteDance also still owns just under 20% of the company.
It’s notable that investment bankers advising on a deal generally receive fees of less than 1% of the transaction value, with that percentage typically becoming smaller as the size of the deal increases. According to The Wall Street Journal, Bank of America is due to make around $130 million for advising railroad operator Norfolk Southern on its $71.5 billion sale to Union Pacific—one of the largest fees on record for a single bank on such a deal.
Naturally, the administration has claimed the fee is justified given Trump’s role in “saving” TikTok in the United States and negotiating the deal with China in the first place. But it’s also not the first fee the Trump administration has extracted from private sector investors.
The administration took a nearly 10% stake in Intel and has agreed to funnel a portion of chip sales to China from Nvidia in exchange for granting export licenses. The Trump administration also took equity stakes in several other companies, including a “golden share” agreement with Japanese steel giant Nippon Steel.
