President Trump Proposes a US Sovereign Wealth Fund to Acquire TikTok
In a recent announcement, President Donald Trump revealed a novel idea: the possibility of acquiring TikTok through a newly proposed US sovereign wealth fund. The statement, though vague on specifics, hinted at a potential deal that could ensure the continued availability of the popular short-form video app in the United States. Trump suggested that TikTok could be "put in" the proposed fund, emphasizing that such a move would align with the interests of American users. He also mentioned that other countries, such as Norway and Saudi Arabia, have successfully utilized sovereign wealth funds to manage state-owned investments, inspiring the US to follow suit.
Trump acknowledged that the idea is still in its exploratory phase, stating, "As an example, TikTok, we’re going to be doing something, perhaps, with TikTok and perhaps not. If we make the right deal, we’ll do it. Otherwise we won’t." He also hinted at the possibility of forming a partnership with wealthy individuals or entities, leaving the door open for multiple options. This proposal comes at a critical time for TikTok, as the app faces a looming deadline to find a new owner by April or risk being banned in the US.
The Context: TikTok’s Struggle for Survival in the US
TikTok has been under intense pressure since Trump signed a 75-day extension of a law requiring the app to be sold off from its China-based parent company, ByteDance. The law, which was passed with bipartisan support in Congress and signed by former President Joe Biden, aims to address concerns over TikTok’s ties to China and potential security risks. Trump has scholarships to facilitate a deal that would keep the app accessible to its 170 million American users. Previously, he suggested that the US could take a "50% ownership position" in a joint venture, potentially involving TikTok’s existing or new owners.
However, the idea of using a sovereign wealth fund to acquire TikTok is still in its infancy, and the timeline for making it a reality is tight. With TikTok’s deadline fast approaching, there are significant hurdles to overcome. For one, it is unclear who would manage the fund or whether it could assemble the tens of billions of dollars needed to purchase the platform. Additionally, the acquisition raises complex questions about how the app would be managed and regulated under government ownership.
Legal and Technical Challenges of the Proposal
From a legal standpoint, the proposal could technically comply with the sell-or-ban law if certain conditions are met. According to Alan Rozenshtein, a professor at the University of Minnesota Law School, the law requires ByteDance to hold no more than a 20% stake in TikTok and to sever all operational ties with the app. Additionally, ByteDance would have to relinquish full control of TikTok’s algorithm, a demand that both the company and Chinese officials have opposed. Rozenshtein noted that meeting these conditions would address the concerns that led Congress to pass the law in the first place.
However, the proposal also raises significant legal and ethical questions. If the US government were to acquire a large ownership stake in TikTok, the app could become "ungovernable" due to First Amendment protections. These protections could limit the government’s ability to regulate content on the platform, creating a complex situation where the state-owned app would have to balance free speech with national security concerns. Rozenshtein summed up the situation: "This gets very complicated very quickly."
User Backlash and the Risk of Losing TikTok’s Appeal
Another critical issue is the potential backlash from TikTok’s American users. Many users have expressed skepticism about the government’s motivations for forcing a sale of the app and frustration over the prolonged uncertainty surrounding its future. If the US government were to acquire TikTok, some users have worried that the app could become a tool for government monitoring or censorship, undermining its appeal. As one user put it, "I don’t think nobody wants that." Another user expressed concerns that government ownership could "change what we’re allowed to say, who we’re allowed to criticize," describing the idea as "absolutely f***ing dystopian."
The loss of user trust could have severe consequences for the app’s viability. If users abandon the platform, advertisers would likely follow, potentially rendering such an investment unprofitable. This dynamic highlights the delicate balance the government would need to strike if it were to pursue ownership of TikTok. While the aim may be to secure the app’s future in the US, the means could ultimately lead to its downfall.
The Viability of a US Sovereign Wealth Fund for TikTok
Despite the potential benefits of a US sovereign wealth fund, the idea of using it to acquire TikTok is fraught with challenges. Establishing such a fund would require significant time and resources, and the deadline for TikTok’s sale is rapidly approaching. Moreover, the fund would need to assemble tens of billions of dollars to purchase the platform, a feat that is far from guaranteed. Even if the fund were to somehow materialize, there are no clear answers about who would manage it or how it would operate.
Furthermore, the acquisition of TikTok by the US government would set a precedent that raises important questions about state ownership of private companies, particularly in the tech sector. While the idea may have been inspired by similar funds in other countries, the context in the US is unique. The interplay between free market principles, national security concerns, and individual freedoms creates a complex environment for such a proposal to navigate.
Conclusion: A Risky and Uncertain Future for TikTok
President Trump’s proposal to acquire TikTok through a US sovereign wealth fund represents a bold and unconventional approach to resolving the app’s challenges in the US. While the idea may align with the administration’s goal of preserving access to the platform for American users, it is fraught with legal, technical, and practical challenges. From the difficulty of establishing the fund to the potential backlash from users, the path forward is uncertain.
Ultimately, the fate of TikTok in the US hangs in the balance, and the clock is ticking. Whether through a government-backed acquisition, a private sale, or an outright ban, the outcome will have significant implications for the app’s 170 million American users, as well as for the broader debate over technology, security, and freedom of expression in the digital age. As the deadline looms closer, one thing is clear: the future of TikTok in the US remains as uncertain as ever.
