President Trump’s proposed TikTok deal might be hitting some snags. The situation seems tied to Congressional billionaires, tax implications, and concerns about China.
Billionaire investor Jeff Yass, a prominent Trump supporter for the 2024 election and head of Susquehanna Partners, could find himself facing Congressional backlash, especially if he’s obliged to sell his current shares in Bytedance.
The same goes for Billford from General Atlantic and KKR, a major private equity firm. They have substantial investments in Bytedance and are considering rolling over their stocks to a new U.S.-controlled company to dodge heavy capital gains taxes.
In recent discussions, Congressional representatives focused on Chinese investments have indicated they plan to closely scrutinize the TikTok “framework” outlined by President Trump earlier this week.
Susquehanna holds around 15% of Bytedance, with General Atlantic having a similar stake. KKR’s involvement is smaller, at roughly 1.7%.
A sticky point revolves around whether these rollovers comply with current laws and if a U.S. majority will indeed control TikTok. There’s a chance that Chinese stakeholders could still maintain a significant share if the remaining 19.9% stake is kept in Mainland China.
According to some White House insiders, they believe the deal aligns with existing laws. “There’s no way the law prevents U.S. investors from utilizing Chinese stocks for managing a new company,” one mentioned. “They qualify as U.S. investors under laws that stipulate ownership has to be capped at 19.9%.”
However, others in the mix are less optimistic. There are rising concerns that a sale could violate laws designed to limit TikTok’s Chinese ties.
One investor shared, “If someone holding Bytedance stock intends to keep it, they’ll likely have to sell it.” They worry about how the governance structure would work if a majority of the stocks remain tied to Chinese control.
General Atlantic didn’t offer any comments, and reps from Susquehanna and KKR were also silent.
Recently, Congressional critics of China stated they would thoroughly examine the TikTok plans set forth by President Trump. Many advocate for shutting down TikTok due to fears of it being a conduit for misinformation and espionage targeted at U.S. users, especially minors.
Sources indicate that Xi Jinping, president of China, has agreed to allow Oracle to take control and amend critical algorithms that curate content based on user preferences. This algorithm is seen as essential for the app, but critics worry it could be exploited for surveillance.
Yass, Ford, and KKR could potentially negotiate some term adjustments to maintain their shares and invest in American enterprises, estimated to be worth around $50 billion to soothe Congressional anxieties.
Another option is to limit their share sales and instead redistribute some of their stocks into new entities. This could mean that the shares tied to the Chinese ordinance might only account for 49%, addressing concerns of the Congressional hawks.
Alternatively, there’s the possibility of distancing themselves from Chinese holdings entirely and presenting a sound legal strategy to President Trump.
The algorithm dilemma had been regarded as a critical challenge, but a recent stock issue discussion surfaced just Tuesday.
