SCOTT SIMON, HOST:
The Trump administration recently approached a group of American investors set to take over TikTok's U.S. operations with an unusual demand - if they want to close the deal, they've got to pay a big one-time fee to the federal government. It's the latest example of something that's becoming increasingly common in the White House - extracting cash from private businesses to make a deal. NPR's Bobby Allyn has been looking into this and joins us. Bobby, thanks so much for being with us.
BOBBY ALLYN, BYLINE: Hey, Scott.
SIMON: First, who's buying what I'll call U.S. TikTok?
ALLYN: Yeah. There's a number of mostly U.S. investors, including Michael Dell, the Murdoch family and Oracle, which is run by Trump ally Larry Ellison. And like you said, they're buying the U.S. side, so the U.S. version of TikTok to comply with a federal law that says China cannot have control over the app. The White House is valuing the deal at around $14 billion.
SIMON: But of course, that's not with the additional fee. How much is that fee going to be?
ALLYN: I have a source with direct knowledge of the talks who was not authorized to speak, but they said the investors have agreed to a fee in the low billions, and that would be devoted to the U.S. treasury.
SIMON: Why would the investors pay that?
ALLYN: My source told me that it's just seen as the price of doing business right now, but to say this kind of fee to the federal government is unusual is quite the understatement. I talked to historians, economists and industry insiders, Scott, who all told me that squeezing businesses like this has very few parallels in modern history.
SIMON: And this is not the first time the administration has gotten involved in a deal like this, right?
ALLYN: Yeah, there's a number of other examples, including chipmakers Nvidia and AMD. They're going to be giving the federal government 15% of its sales to China. The White House secured a so-called golden share in U.S. Steel. And my colleague, David Folkenflik, has reported that when CBS settled a Trump lawsuit for $16 million, it cleared the way for parent company Paramount to merge with Skydance Media. Some experts say these arrangements look like shakedown schemes. I talked to Luigi Zingales. He's a finance professor at the University of Chicago, and he calls these arrangements rent seeking.
LUIGI ZINGALES: Common language is less sophisticated. It's called sucking up. But it's actually quite expensive.
ALLYN: Zingales says it's expensive because these payments end up essentially being a tax on business transactions that involve the federal government, and they actually can change how businesses operate day-to-day.
ZINGALES: Instead of innovating, people will spend time trying to ingratiate Trump. Instead of going and find new discovery, they will spend time in Washington in the corridors of power, trying to figure out what pleases Trump.
SIMON: Bobby, how does the Trump administration respond to this criticism?
ALLYN: The White House didn't return my request for comment, but in the Oval Office on Thursday, Trump was asked about the multibillion-dollar fee, and he dodged the question. Instead, he said, quote, "the U.S. comes out great" in the TikTok deal. Now, after Trump got Intel to agree to a 10% stake of the company to the U.S., following Trump's calls for the CEO of Intel to resign, Trump did make a post on Truth Social, and it said, quote, "the United States paid nothing for these shares, and the shares are now valued at approximately $11 billion. This is a great deal for America and also a great deal for Intel." So the president does seem to view these unusual interventions in private business as something of a win for the country.
SIMON: NPR's Bobby Allyn. Thanks so much.
ALLYN: Thanks, Scott. Transcript provided by NPR, Copyright NPR.
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