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The chaos surrounding the TikTok probe, including Trump's loud involvement, is unprecedented in the history of the nearly 50-year-old panel.

Image: Nikolas Kokovlis/NurPhoto via Getty Images
Trump's Twitter account on a phone in front of the TikTok logo
Power

‘This has been botched’: This is what makes Trump’s TikTok tirade so unusual

People who have worked with the Committee on Foreign Investment in the United States say this is not how any of this works.

The Committee on Foreign Investment in the United States is a notoriously secretive government panel focused on assessing the national security risks around business deals between U.S. businesses and foreign entities. By law, everyone who works with CFIUS is bound by confidentiality requirements that prevent them from speaking publicly, or even privately, about what its members discuss and investigate.

"CFIUS, to an outsider, is very much like looking at an iceberg, recognizing that 90% of it happens below the surface," Charles Schott, who oversaw CFIUS from 2003 to 2007, told Protocol.

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That's why it has been so jarring for former CFIUS officials and other experts to watch President Trump, Secretary of State Mike Pompeo and Treasury Secretary Steve Mnuchin speak so openly, and so politically, about the CFIUS investigation into TikTok.

"It is unusual for a case to go to the president," said one former CFIUS official, "and further, it's unusual for an administration to say anything in particular prior to the order issued by the president."

Chris Griner, a former attorney adviser with the Department of Defense and the head of the CFIUS compliance group at the law firm Stroock, said it's rare for top-level presidential advisers to opine about a confidential investigation in the public eye. "I'm sure the [CFIUS] staff are apoplectic because they don't talk about these things," he said.

Former government officials told Protocol that the chaos surrounding the TikTok probe, including Trump's loud involvement, is unprecedented in the history of the nearly 50-year-old panel, which has already been criticized for promoting a protectionist approach to international relations. The politicization of a CFIUS investigation alarmed several experts, who said the Trump administration is dragging the national security process into uncharted territory and stepping outside the bounds of what is legally possible.

"I'm a China hawk, but this has been botched over the past five days or so," said Derek Scissors, a resident scholar with the conservative American Enterprise Institute.

CFIUS did not respond to a request for comment. White House spokesperson Judd Deere denied that Trump has politicized the CFIUS process. "This is not a political matter, it's a matter of national security, and the president has no higher priority than the safety and security of the American people," Deere said.

In particular, former officials have been alarmed by Trump's insistence that the U.S. government should make money off of the transaction if TikTok is acquired by an American company. CFIUS last week decided to order Chinese parent company, ByteDance, to divest TikTok, and the company has started negotiating with Microsoft over a potential sale.

Sometimes, the companies involved in a CFIUS negotiation do have to pay a "filing fee" of up to $300,000, meant to offset some of the costs of the committee's work, thanks to a reform law passed in 2018. But there's no precedent for the Treasury Department to take a cut from a deal — let alone a "very substantial" portion, as Trump has called for.

"CFIUS never actually charges a fee for this, so the whole idea of the Treasury Department getting a contribution is basically like Tony Soprano — [the administration] extorting money out of Microsoft," said Paul Rosenzweig, who worked with CFIUS while working at the Department of Homeland Security between 2005 and 2009. "It's wacky, is what it is." Rosenzweig is now a senior fellow focused on technology and cybersecurity with the R Street Institute.

CFIUS' structure gives the president broad authority to force a divestiture if the panel decides there is a pressing national security threat. For instance, Trump in 2018 blocked microchip maker Broadcom's proposed takeover of Qualcomm over concerns that it would benefit China.

But there have only been six transactions in the history of CFIUS that have resulted in a presidential decision. And there have been none that resulted in a total ban of the company in question, as Trump proposed last week and has since rolled back.

The former CFIUS official said there is little law or precedent around what happens when a president gets personally involved in a CFIUS decision. "CFIUS can refer a case to the president for blocking or forced divestment, but then [the statute] says the president's decision is not subject to judicial review," he said. "That's important because it means that there's not a lot to prevent the president from doing whatever the president wants."

So far, it seems more likely that TikTok U.S. will be acquired by an American company such as Microsoft. But even Microsoft's involvement has set off alarm bells, as Trump has specifically endorsed the company as a potential buyer, and Microsoft made it clear that the acquisition will be contingent on Trump's approval.

"Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok in the United States," Microsoft said in a blog post.

"Microsoft looks forward to continuing dialogue with the United States government, including with the president," the post continued.

Scissors said Microsoft's announcement "should not have happened."

"It should have happened this way: Microsoft doesn't say anything other than it's negotiating with TikTok to do some vague 'remediation,'" Scissors said. "But this got turned into a loud conversation featuring Microsoft, which was not normal. You don't bias the process for or against a particular company."

The Trump administration has made it clear that TikTok will only be the first chapter in a much larger, sweeping anti-Chinese app policy. And CFIUS will only become more and more relevant as the U.S. ratchets up its efforts against Chinese business on U.S. soil.

"CFIUS has always been viewed skeptically by everyone else around the world as a quasi-protectionist American thing," said Rosenzweig. "This will play into that."

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