Trump's demand that the US get a cut of TikTok's sale could set a dangerous precedent

TikTok is up for grabs. But while the popular short-form video app likely won't lack for suitors, President Donald Trump says the US government needs to get a "substantial amount of money" as part of any deal.

It's a demand that experts say is far outside the norm at best, and if it were to be met could set a dangerous precedent.

"It's really not for the President to say that a deal can go through or a deal can't go through, or that a company must pay a ransom to the United States government or get a deal done by a particular deadline," said Avery Gardiner, general counsel and senior fellow for competition, data and power at the Center for Democracy and Technology. "That's very unusual, it's more than very unusual. It's wrong, it doesn't happen."

The US government's authority to compel foreign firms to sell their business to an American company comes primarily from the Committee on Foreign Investment in the United States (CFIUS). CFIUS has stepped up its scrutiny of Chinese-owned firms in recent years as tensions between the United States and China on technology escalate — the committee recently forced the Chinese owners of Grindr to sell the gay dating app to a US-based company over national security concerns.

ByteDance, the Chinese tech firm that owns TikTok, is already under investigation by CFIUS over its 2016 acquisition of US app Musical.ly. And there is a scenario in which the committee could insert a fee to cover the government's expenses from the review process, according to Jeffrey Bialos, a partner at law firm Eversheds Sutherland who served as the Deputy Undersecretary of Defense for Industrial Affairs in the Clinton administration.

"The only argument I can see the government making is that they should be compensated for the time and effort they spent on this," Bialos said. However, "to require that part of the consideration ByteDance is getting from selling its business go to the US government, I think that's an overreach."