TikTok Continues Operating in US, Trump Administration Receives $10 Billion in "Windfall"

TikTok Parent Company ByteDance

Phoenix Technology News, Beijing Time March 14 — According to The Wall Street Journal, the Trump administration will receive approximately $10 billion from investors who recently gained control of TikTok’s U.S. operations, as the government benefits from allowing this popular social media app to continue operating in the United States.

Sources familiar with the matter say this payment is part of the agreement. Under the deal, investors friendly to the Trump administration gained control of TikTok’s U.S. business from ByteDance. This is an additional fee, and investors are also required to invest in establishing a new entity in the U.S. to operate TikTok.

These investors include cloud computing company Oracle, private equity firm Silver Lake Partners, and Abu Dhabi investment firm MGX. Insiders say these investors and other parties paid about $2.5 billion to the U.S. Treasury at the time of the January transaction, with several additional payments to follow, bringing the total to $10 billion.

When announcing the TikTok deal framework last September, Trump said, “The deal is not fully finalized yet, but we will get some returns.” He also added that, considering the scale of the deal and the government’s investment of funds and effort, it is reasonable to receive compensation. He previously stated, “The U.S. will get a substantial fee premium, which I call a fee premium, just for facilitating this deal. I don’t want this revenue to go to waste.” The Wall Street Journal previously reported that the U.S. government expects to receive billions of dollars in fees.

Historians say that the government helping to arrange the deal and collecting $10 billion in fees is nearly unprecedented. U.S. Vice President Vance previously stated that the new entity responsible for TikTok’s U.S. operations was valued at about $14 billion, but some tech analysts believe this valuation significantly underestimates the company’s true worth.

In comparison, in typical transactions, investment banks providing advisory services usually earn less than 1% of the transaction amount. As deal sizes grow, this percentage often decreases. For example, U.S. Bank advised Norfolk Southern in a $71.5 billion sale to Union Pacific, earning about $130 million in advisory fees, one of the highest fees earned by a single bank in a deal.

According to the agreement, the U.S. entity must share profits with ByteDance. ByteDance has licensed its highly popular algorithm to the new company so it can be fully trained for U.S. users, while ByteDance still holds nearly 20% of the shares. (Author: Xiao Yu)