The Trump administration will receive about $10 billion in fees from investors in the recently completed deal to acquire control of TikTok's U.S. operations. The huge sum is a windfall it will receive from allowing the popular social app to continue operating in the United States.


The payment is part of a deal in which investors friendly to the Trump administration would take control of TikTok's U.S. operations from parent company ByteDance, according to people familiar with the matter. This fee does not include investment funds to establish a new entity to operate the application in the United States.

Investors include cloud computing company Oracle, private equity firm Silver Lake and Abu Dhabi investment firm MGX. According to people familiar with the matter, these investors and other backers paid approximately US$2.5 billion to the US Treasury when the transaction was completed in January this year, and will be paid in multiple installments until the total reaches US$10 billion.

"The negotiations have not been fully finalized, but we will get a sum of money," Trump said when he announced the deal's framework in September. He also said the size of the deal and the money and effort the government had invested deserved compensation. He has also previously said: "The United States will get a huge 'additional fee' - I call it a surcharge - just for facilitating this deal, and I don't want to give up this money in vain."

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

Historians say the $10 billion payment is almost unprecedented for the government that helped arrange the deal. Vice President J.D. Vance previously said the deal would value the new entity operating TikTok's U.S. business at about $14 billion, a valuation that some technology analysts believe significantly undervalues ​​the company.

Under the agreement, TikTok’s new U.S. entity will share profits with ByteDance; ByteDance licensed its popular algorithm to the new company so that it can be fully trained based on U.S. user data, and still holds nearly 20% of the new entity’s shares.

On a regular transaction, the fee charged by an investment bank that provides advisory services is usually less than 1% of the transaction value, and the larger the transaction size, the lower the fee is usually. Bank of America is expected to be paid about $130 million after advising on rail operator Norfolk Southern's $71.5 billion acquisition by Union Pacific, one of the highest fees ever recorded for a single bank in a single transaction.

Administration officials said the fee was justified given Trump's role in rescuing TikTok's U.S. operations and negotiating a deal with China while responding to lawmakers' security concerns.

Trump brokered the deal to comply with a law that requires TikTok's U.S. operations to reduce its stake in ByteDance or cease operations. Many lawmakers are concerned that a Chinese company controlling an app that holds vast troves of personal data on U.S. users poses security risks, a turmoil that dates back to Trump's first term as president.

TikTok-related fees from private-sector investors are the latest recent deal between the Trump administration and a major U.S. business. Trump has acquired nearly 10% of chip giant Intel and has agreed to receive a portion of the proceeds from Nvidia's chip sales to China in exchange for export licenses. In addition, the Trump administration also holds equity interests in many other companies, and after reaching a "golden share" agreement with Nippon Steel to acquire U.S. Steel, it gained a say in the operations of U.S. Steel.