The arrangement, described as a “transaction fee,” follows the transfer of TikTok’s American operations from its Chinese parent company, ByteDance, to a consortium of US-friendly investors.
According to reports first published by the Wall Street Journal, the investors include Oracle Corporation, the UAE-based investment firm MGX, and private equity firm Silver Lake.
According to reports first published by the Wall Street Journal, the investors include Oracle Corporation, the UAE-based investment firm MGX, and private equity firm Silver Lake.
These entities, together with other backers, initially paid $2.5 billion (Ksh323 billion) to the US Treasury when the deal closed in January, and further payments are scheduled until the cumulative amount reaches Ksh1.3 trillion.
Speaking at the signing of the executive order approving the deal in September, former President Donald Trump emphasised national security concerns linked to Chinese ownership of TikTok, citing the platform’s massive popularity among US users.
Speaking at the signing of the executive order approving the deal in September, former President Donald Trump emphasised national security concerns linked to Chinese ownership of TikTok, citing the platform’s massive popularity among US users.
“It’s owned by Americans, and very sophisticated Americans. This is going to be American operated all the way,” Trump said at the time.
The size of the fee is unprecedented. Analysts note that while investment bankers typically earn around 1 per cent of deal value, the US government’s “fee-plus” arrangement effectively amounts to nearly 70 per cent of the US TikTok valuation, which JD Vance estimates at roughly $14 billion (Ksh1.8 trillion).
The size of the fee is unprecedented. Analysts note that while investment bankers typically earn around 1 per cent of deal value, the US government’s “fee-plus” arrangement effectively amounts to nearly 70 per cent of the US TikTok valuation, which JD Vance estimates at roughly $14 billion (Ksh1.8 trillion).
Under the agreement, TikTok will continue operating in the US, with investors required to share profits with ByteDance.
Experts say the deal highlights the unusual level of involvement the Trump administration has had in private sector transactions.
Experts say the deal highlights the unusual level of involvement the Trump administration has had in private sector transactions.
Past interventions include stakes in companies such as Intel and USA Rare Earth, a rare minerals mining firm.
Trump also launched a personal cryptocurrency while in office, promising investors “guaranteed direct access” in exchange for $5 million contributions.
Further unusual aspects of Trump’s post-presidential dealings have surfaced, including the reported sale of his private telephone number to CEOs and crypto investors, generating media speculation about the blending of personal influence and business leverage.
While controversial, the TikTok transaction fee has been framed by supporters as a strategic move to safeguard US interests and assert economic control over a popular platform, while critics argue it raises ethical and legal questions about government participation in private deals.
The outcome of the TikTok arrangement will be closely watched, as it sets a precedent for government involvement in technology and social media ownership in the United States.
Further unusual aspects of Trump’s post-presidential dealings have surfaced, including the reported sale of his private telephone number to CEOs and crypto investors, generating media speculation about the blending of personal influence and business leverage.
While controversial, the TikTok transaction fee has been framed by supporters as a strategic move to safeguard US interests and assert economic control over a popular platform, while critics argue it raises ethical and legal questions about government participation in private deals.
The outcome of the TikTok arrangement will be closely watched, as it sets a precedent for government involvement in technology and social media ownership in the United States.
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