Donald Trump is a compulsive issuer of executive orders: since January, there have been more than two hundred of them. Some are glorified press releases; others are more significant. “Saving TikTok While Protecting National Security” falls decidedly into the second category. Signed last week, on the same day that the Department of Justice indicted James Comey, it is designed to facilitate the transfer of a social-media platform with a hundred and seventy million American users to a consortium that features several of the President’s political and financial benefactors. According to news reports, the potential investors in the TikTok deal include two conservative billionaires—Larry Ellison, the co-founder of Oracle, and Rupert Murdoch, the proprietor of Fox News—and two investment firms with ties to the Administration: Susquehanna, which already owns a stake in TikTok’s Chinese parent company, ByteDance; and Andreessen Horowitz. Also said to be involved is MGX, an investment fund backed by the government of the United Arab Emirates that recently deposited two billion dollars into crypto assets created by World Liberty Financial, a company that the Trump family controls.
Perhaps the timing of these developments was coincidental, but it didn’t appear that way. Indicting Comey and bringing the U.S. arm of TikTok into the MAGA fold seem like part of the same grand project to concentrate media power in Trump’s hands, or the hands of his allies, and to rout his perceived enemies. To be sure, the executive order was signed days after Disney pushed back against the White House’s pressure campaign and restored Jimmy Kimmel to the air after a brief suspension. But, in today’s media ecosystem, late-night comics on network television don’t have anything comparable to the reach of a social-media behemoth such as TikTok.
The campaign to force TikTok to divest its U.S. operations started out as a bipartisan initiative driven by ill-defined concerns that the app represented a threat to national security. Trump, toward the end of his first term, issued an executive order to ban the social-media platform on these grounds, but the courts struck it down. When Joe Biden was in the White House, he formally rescinded Trump’s ban but demanded a divestment. In 2024, Congress passed a bill, with support from both parties, that mandated a sale or closure of the app by January of this year. While campaigning for reëlection, Trump used TikTok to reach out to younger voters and had a change of heart about banning it. Since coming to office, he has disregarded the language of 2024 legislation and postponed the deadline for a sale four times. The deal he has finally come up with to resolve the impasse warrants inspection from every angle.
When a major company decides or is legally obliged to dispose of one of its big subsidiaries, it would normally engage an investment bank to find a buyer or buyers. This intermediary would then obtain financial and operational information about the business and pass it on to potential bidders, with the goal of starting an auction and commanding as high a price as possible. Organizing an initial public offering of stock in the subsidiary would be another option. In this case, the law requiring a divestment and the involvement of the Chinese government complicated things. But we know precious little about how the potential sale was arranged, whether any financial intermediaries were involved, or how the Ellison consortium was selected.
We do know, partly because Trump said so earlier this year, that at least four groups expressed interest in bidding. They included a cadre led by the billionaire Frank McCourt, who formerly owned the Los Angeles Dodgers. In June, McCourt told the “CBS Mornings” show that he and his associates had informed Vice-President J. D. Vance’s office that they were “ready, willing, and able to buy the platform.” Other potential buyers reportedly included Amazon, the A.I. firm Perplexity, and a coalition led by Tim Stokely, the founder of OnlyFans. The executive order that Trump signed doesn’t say what happened with the other suitors, or how the winning consortium was put together. It merely notes that Vance led an interagency process that determined that the proposed deal amounted to a “qualified divestiture” under the 2024 legislation. This interagency process involved not only Vance’s office but the National Security Council, the Office of Science and Technology Policy, the Department of the Treasury, the Justice Department, the Department of Commerce, and the Office of the Director of National Intelligence.
Last week, Trump said the owners of the U.S. operations of TikTok would be “American investors, American companies, great ones, great investors.” He didn’t mention the investment firm MGX, which is backed by the Emirati government and run by Sheikh Tahnoun bin Zayed al-Nahyan, an Emirati royal who is also the monarchy’s national-security adviser. When MGX bought two billion dollars’ worth of stablecoins issued by World Liberty Financial earlier this year, the purchase established the Trump company as a major player in the crypto world. And, as the Times reported earlier this month, the move came as the U.A.E. was trying to buy thousands of advanced microchips designed by the U.S. firm Nvidia. The Trump Administration subsequently approved the purchase of the chips.
How did MGX pop up in the TikTok transaction? That’s another open question, as is the issue of whether the potential buyers are getting a sweetheart deal. Last week, Vance said the deal would value TikTok’s U.S. operations at fourteen billion dollars. That is a lot lower than previous estimates of its worth, which ranged as high as fifty billion dollars. It “could be the most undervalued tech acquisition of the decade,” Ashwin Binwani, the founder of an eponymous investment firm, told Bloomberg last week. However, another report from Bloomberg provided a possible explanation for the low valuation: even after the divestiture deal goes through, ByteDance will continue to receive about half of the profits that TikTok generates in the United States even though its ownership stake will be reduced to twenty per cent.