Inside Trump’s TikTok reversal: How advisers mobilized their deal-making efforts
Inside Trump’s TikTok reversal: How advisers mobilized their deal-making efforts. Sen. Lindsey Graham wasn’t entirely sure what TikTok was, beyond a source of videos of piano-playing dogs and dancing cats. Nonetheless, he was tasked with a mission: talk President Donald Trump down from his threatened ban on the Chinese-owned platform that is hugely popular with American kids.
So on Saturday, following 18 holes of golf, the 65-year-old Republican and self-described luddite urged the 74-year-old President to reconsider his pending ban on the popular social media app.
His call, at the behest of Treasury Secretary Steven Mnuchin along with a weekend of nudging from other key White House advisers, helped avert Trump’s overt banning of the app — what many felt would be a political disaster. The President’s official new position clears the way for a Microsoft deal to acquire the brand — and keep young people across the country, many of them eligible voters, comfortable in the cozy video environs they’ve come to love.
But in the view of many of Trump’s top aides, it also stands to bolster US national security and benefit an American company. The President had seemingly been on board with the acquisition until Friday, when he told reporters on Air Force One that he was looking to ban it, throwing off the already in-the-works acquisition talks.
With Phase I of his trade deal with China looking less promising by the day, and the global pandemic still raging across the US, Trump is looking for ways to escalate his dispute with China ahead of the election. And the TikTok debate comes as his advisers weigh US economic interests against national security interests, which at times, don’t align. In this case, those advocating for a Microsoft acquisition say, it’s a win-win situation.
In his conversation with Graham, the President, who was hearing similar pleas from other top aides and allies, made clear he heard the concern as a flurry of frantic calls. He eventually relented, giving Microsoft 45 days to negotiate a deal.
The ‘deal’ camp
Several officials briefed on the talks told CNN that Mnuchin, economic adviser Larry Kudlow, Attorney General William Barr and White House counselor Kellyanne Conway all scrambled to persuade the President to back a deal for Microsoft. US officials believe the Microsoft acquisition would help the prevent vast amounts of Americans’ data from being used to aid China’s development of artificial intelligence technology, and would amount to an economic win for the US.
“Mnuchin went in with a pretty strong hand,” one person said, noting that the Treasury secretary has long embraced the idea of closer economic ties to China as key to bolstering US economic growth.
Mnuchin and others then enlisted Barr as part of the push to find the off ramp.
While administration lawyers believe they could find a way to accomplish Trump’s threat of an outright “ban,” they acknowledge it would encounter some legal hurdles and wouldn’t be that simple. So the Microsoft acquisition presents a preferable off ramp, Justice Department officials believe. Barr has communicated his support for the Microsoft acquisition to accomplish the goal.
The Trump campaign has also weighed in, with advisers telling the President that banning the popular app, known for its short viral video clips, could hurt him with younger voters in the November election.
GOP operatives that work closely with the Trump campaign say that the perception that Trump is treated negatively by many of the app’s young users may have played a role in his decision to act, but the original concern was over national security. Those security concerns made it to Trump’s radar when the app became front and center because of the campaign.
Campaign officials downplayed the idea raw politics factored into Trump’s position. They have weathered fallout from the President’s Tulsa, Oklahoma, rally where TikTok users encouraged people to sign up for tickets to his rally without plans to attend, inflating the RSVP numbers. But officials say TikTok had no influence on the poor showing and one campaign official telling CNN that it had “zero” to do with the White House decision to ban the app.
On Sunday, Microsoft CEO Satya Nadella said in a statement that the company would continue negotiations to acquire TikTok from its parent company, ByteDance. The company said its aim is to buy TikTok operations in the US, Canada, New Zealand and Australia, and would leave other parts of the business to its Chinese ownership.
On Monday, Trump told reporters that TikTok would shut down on September 15 unless Microsoft or another company purchased it. He added that the Treasury Department would need to receive money in return for the deal, although several officials told CNN that it’s not clear how the President intends to achieve this or whether it is possible or even ethical from a corporate standpoint.
“There’s no such concept,” said one seasoned investor in startup companies. The US “doesn’t charge fees to close deals so this is basically a shakedown.”
Prior to the President’s threats to ban the app all together, Microsoft said it informed the Committee on Foreign Investment, or CFIUS, of its interest in TikTok. But then Trump threatened to derail those efforts with his public remarks on Friday, prompting his advisers and Microsoft’s CEO to swoop in and try to talk him out of it, two of the people said.
The ‘ban’ camp
Trump, and some of his most hawkish national security advisers, including deputy national security adviser Matthew Pottinger, and China trade adviser Peter Navarro, view the app as a tool for Chinese espionage and data collection, arguing that it gives China access to massive amounts of American user data. Lawmakers on both sides of the aisle agree with that assessment.
In December, the Pentagon issued guidance that all military personnel should delete TikTok from all smartphones. Individual military branches heeded that advice, and moved to ban the social media app on government-issued smartphones.
For months, National Security Council officials put pressure on other agencies to find a way to ban the app, and the notion often camp up in policy meetings where Chinese data collection and espionage tactics were being addressed, according to one former official.
Secretary of State Mike Pompeo had advocated for a total ban as well, but “he realized how popular the app was,” another former official said, describing the Secretary’s slow walk away from his original position.
TikTok’s terms of service authorize it to collect a significant amount of data from its users and since the parent company is subject to Chinese law, some warn that the company could be compelled by the government to hand over that data. TikTok refutes these claims, arguing that data from US users remains exclusively in US-based servers.
Speaking to reporters this weekend, Mnuchin said that CFIUS had reviewed the app and unanimously made a recommendation on action to Trump, but would not give details on what that recommendation was. Mnuchin added that the President was looking at other options including forcing a sale by TikTok’s parent company or banning the app using the International Emergency Economic Powers Act.
“We have bipartisan support. We are not keeping TikTok in its current form,” Mnuchin said.
Navarro, who is said to be opposed to a deal, told CNN on Monday that Microsoft is one of several American technology companies that helped China originally build a firewall used to surveil, track, monitor, sensor and imprison the Chinese people.
“One of the surviving search engines in China is Bing, and Microsoft owns that,” he said. “So you know there’s some fishy stuff going on there. Plus, if you’re in China doing a Skype call which is another Microsoft product, the (Chinese Communist Party) is listening in. The question is, is Microsoft going to be compromised — would it be useful to have a rule if you sell it that maybe Microsoft to divest its Chinese holdings?”
While the President has no inherent, unilateral authority to create legally binding rules relating to foreign investment in the US, Congress can and has delegated that authority to the president. Among the executive branch authorities is the International Emergency Economic Powers Act (IEEPA), which some of the President’s more hawkish advisers hope he will use not only to ban TikTok, but also WeChat and other China-based apps.
As one person close to the talks said, “this is not a done deal. If the President is serious about protecting national security interests and going after China’s malicious cyber activities, he’s going to have to figure out what he wants to do about these other apps as well. China may not freak out about TikTok but it will be a huge deal if the Trump administration decides to go after WeChat as well.”
“Unless there is a national security risk, then I would say the private sector should solve this,” said Derek Scissors, a China expert at the American Enterprise Institute. “And (regarding) claims by Navarro and others that you can’t trust the Chinese with anything, then it requires a lot more than banning TikTok — but a total decoupling of the US and Chinese economies.”