Trump administration to receive $10 billion intermediary fee for facilitating TikTok deal

Sources say that the investors in the social media platform’s U.S. operations, including Oracle and Silver Lake Capital, have agreed to pay the government billions of dollars.

Author: Miriam Gottfried, Amrit Ramkumar

Summary

The Trump administration will receive approximately $10 billion from the investors involved in the acquisition of TikTok’s U.S. business as a reward for facilitating the app’s continued operation in the United States.

The Trump administration will collect about $10 billion from the investors in the recent control transfer of TikTok’s U.S. operations. This large sum is an unexpected revenue gained because it allowed the popular social media app to keep operating in the U.S.

According to insiders, this payment is part of the agreement — friendly investors related to the Trump administration gained control of TikTok’s U.S. business from its parent company, ByteDance, through this deal. This fee does not include the investment funds used to set up a new entity to operate the app in the U.S.

Investors include cloud computing company Oracle, private equity firm Silver Lake, and Abu Dhabi investment firm MGX. Insiders say these investors and other supporters paid about $2.5 billion to the U.S. Treasury when the deal closed in January, with additional payments planned until the total reaches $10 billion.

When announcing the deal framework in September, Trump said, “The negotiations are not fully finalized, but we will get a payment.” He also stated that the scale of this deal and the government’s effort and investment should be compensated accordingly. He previously said, “The U.S. will receive a huge ‘additional fee’ — I call it an extra charge — just for facilitating this deal, and I don’t want to give up that money for nothing.”

The Wall Street Journal previously reported that the Trump administration expects to receive billions of dollars in fees.

Historians say that the $10 billion payment is almost unprecedented for a government involved in arranging such a deal. Vice President JD Vance previously said that the new entity operating TikTok in the U.S. was valued at about $14 billion, with some tech analysts believing this valuation significantly underestimated the company’s worth.

Under the agreement, the new TikTok U.S. entity must share profits with ByteDance; ByteDance has licensed its popular algorithm to this new company, allowing full training based on U.S. user data, and still holds nearly 20% of the shares.

In typical transactions, advisory fees paid by investment banks are usually less than 1% of the deal size, and the larger the deal, the lower the rate. After advising on Norfolk Southern’s $71.5 billion acquisition by Union Pacific, Bank of America is expected to earn about $130 million, one of the highest fees ever earned by a single bank on a single deal.

U.S. government officials say that considering Trump’s role in saving TikTok’s U.S. operations, pushing negotiations with China, and addressing lawmakers’ security concerns, collecting this fee is justified.

Trump’s involvement in this deal was to comply with a law requiring TikTok’s U.S. business to reduce ByteDance’s ownership stake or cease operations. Many lawmakers worry about the security risks of a Chinese company controlling an app with vast amounts of U.S. user data — a controversy dating back to Trump’s first term.

The fees collected from private sector investors related to TikTok are the latest in a series of recent deals between the Trump administration and major U.S. companies. Trump has acquired nearly 10% of Intel and agreed to receive some revenue from Nvidia’s chip sales to China in exchange for export licenses. Additionally, the Trump administration holds stakes in other companies and gained operational influence over U.S. Steel after reaching a “golden share” agreement with Nippon Steel on the acquisition of U.S. Steel.