Last Wednesday, the Trump administration believed there was a plan to save Tiktok.
The Chinese owners of Tiktok were working with some US investors and Washington officials to work together on the new ownership structure of the popular video app, four people familiar with the situation said. The structure said it would help Tiktok meet the conditions of federal law that require apps to find new owners in order to address national security concerns or face a US ban.
Under the plan, new investors will own 50% of the new American Tiktok companies, while Chinese owners will hold less than 20%, the restrictions specified by the law are two. Byte Dance told the White House that Beijing is happy with the general structure, the two people said.
By Thursday morning, versions of the executive orders from President Trump had been circulating, according to a copy viewed by The New York Times.
The plan then hit the wall. Now that Trump has announced many tariffs on China's imports, the two people said as Trump has not let the Chinese government continue trading in Tiktok.
In response, Trump bought more time. On Friday, he suspended federal law enforcement and extended the deadline for the Tiktok contract to mid-June.
“The report says they made the transaction for Tiktok, not for a deal, but for a fairly close Tiktok. China then changed the transaction due to tariffs,” Trump told reporters Sunday to Air Force 1.
The outage highlights how video apps are plagued by the geopolitical struggle between the US and China over trade and technology advantages. It also reveals China's power over Tiktok's future in the US, raising questions about whether Tiktok's deal will end.
“The parties are so proud to negotiate that we are stuck between two huge economies that are stabbing each other's heads,” said Anupam Chander, a professor of law and technology who targeted Tiktok, a professor of law and technology at Georgetown University. “Tictok was a mouse that got caught up in his feet between these two elephants.”
The Chinese embassies in Washington, Tiktok and Baitedan did not respond to requests for comment. The White House introduced the Times to Trump's post on true social that announced an extension of his for debate over the app.
The administration and ordinances were struggling the structure that allowed Tiktok's biggest US investors, including the Atlantic General and the Susquehanna International Group, while government officials brought in new funds to dilute Chinese ownership of the app.
The interim terms of the transaction said new investors will own 50% of the new American Tiktok company. Current investors own 30% and China's owners are less than 20%, said two people with knowledge of the issue. Private equity giants like Blackstone and Silver Lake were acquiring stakes in new entities along with venture capital firm Andreessen Horowitz.
The proposal is described in a long, detailed document aimed at investors, three people with knowledge of the matter said.
The two involved in the deal said there was more work to do. Certain potential new investors considered any transaction conditional and were subject to due diligence associated with large-scale transactions, they said.
China has always been a wild card to some extent. Before the president's announcement on tariffs last week, Baitedan believed that Beijing was happy that the structure was combined in Washington, the two familiar with the issue said. However, even before the tariff announcement, there was no guarantee that Beijing would provide informal blessings or formal approval.
Discussions about Tiktok can become even more complicated as the trade war between the two countries escalates. China launched retaliatory tariffs after Trump's announcement, urging the president on Monday to warn the country on an additional 50% tariff if it persists.
Trump has repeatedly proposed considering lowering China's tariffs in exchange for approval of the Tiktok deal.
Using tariffs for negotiations is “like a truly amazing effort to force foreign companies to sell,” Chander said.
However, the trade war could still be ongoing in June, he said.
Tiktok keeps it unsold for most of the year.
On Friday, ByteDance confirmed for the first time that he was involved in negotiations with the US government about the future of the app, but said the decision was ultimately in the hands of another party.
“There are important issues that need to be resolved,” a bytedance spokesman told reporters in an email. “The contract is subject to approval under Chinese law.”
Maggie Harberman Reports of contributions.
