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Trump Urges Microsoft To Pay “Key Money” To Treasury Using Illegal Real-Estate Practice

Microsoft Should Refuse Trump’s TikTok Payoff. Trump Urges Microsoft To Pay “Key Money” To Treasury Using Illegal Real-Estate Practice

Paying the U.S. government a cut of TikTok’s sale price would be a dangerous precedent that could blow up in corporate America’s face.

Countries have a lot of powers that companies don’t—even companies worth as much as a small country. But Microsoft’s potential shotgun marriage with TikTok might be a test of the limits of a government’s power over a commercial transaction.

President Trump on Monday openly proposed a financial reward for the coffers of the federal government if Microsoft buys all or part of the social-media company from China’s ByteDance Ltd.

Mr. Trump said he told Microsoft Chief Executive Satya Nadella that “a very substantial portion of that price is going to have to come into the Treasury of the United States, because we’re making it possible for this deal to happen.”

He is correct about one thing: The potential sale wouldn’t be on the table if not for U.S. pressure. Moreover, whatever TikTok’s U.S. operations are worth—its parent values the entire enterprise at around $50 billion—Microsoft is in an unusually strong negotiating position with an outright shutdown being the other alternative.

While the U.S. government has been compensated by private companies before, for financing or arranging bailouts, for instance, this would be unprecedented. It amounts to a finders’ fee—“key money” in Mr. Trump’s parlance, which is an often illegal real-estate practice. Whatever sum Microsoft agreed to pay ByteDance would be further reduced.

Perhaps the White House will quietly walk back the proposal. Mr. Trump has often confused the flow of money in matters of international politics. He frequently insists that the Chinese, rather than U.S. consumers, pay billions to the government as a result of tariffs, or that NATO allies pay fees directly for protection rather than having a target for defense spending as a share of their economy.

What is more, the sum would likely be immaterial to the federal budget—even a $5 billion fee would cover about seven hours of expenses this fiscal year.

If the proposal is serious, and deemed legal, it would set a dangerous precedent for the seizure of foreign businesses through regulatory fiat, and open the door for U.S. firms to suffer the same treatment. In countries such as Venezuela that often has recently been the case. Many business assets such as licenses to operate, mineral rights or physical facilities can be had for token compensation.

Landing the U.S. part of the wildly popular TikTok could be a major prize for Microsoft. But if the price includes an unseemly payout to the U.S. Treasury, corporate America has far more to lose than to gain by participating.

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