US government expected to get multibillion-dollar fee in TikTok deal

Investors in the TikTok deal would pay the government the fee in exchange for negotiating the agreement with China, people familiar with the matter said. President Trump and Chinese leader Xi Jinping approved a preliminary framework for the deal Friday.

The final structure and amount of the fee haven’t been finalized as deal talks continue, the people said. The government recently agreed to become Intel’s largest shareholder and take 15% of the sales from an Nvidia artificial-intelligence chip made for the Chinese market in exchange for granting export licenses.

Trump has mentioned the federal government could get a fee as part of the TikTok deal, but didn’t specify that it could be billions of dollars, an enormous sum for arranging a deal.

“The United States is getting a tremendous fee-plus—I call it a fee-plus— just for making the deal and I don’t want to throw that out the window," Trump said Thursday at a press conference in the U.K.

Investment bankers advising on a typical deal receive fees of less than 1% of the transaction value, and the percentage generally gets smaller as the deal size increases. TikTok’s U.S. operations could be worth many billions of dollars depending on the final outcome of the deal.

The unusual fee arrangement is part of already complicated negotiations. Congress last year passed a law banning the video-streaming app in the U.S. due to worries that China could access the data of American users. It was about to go dark before Trump swooped in at the start of his second term and pledged to arrange a deal to transfer control of the company from TikTok parent ByteDance to U.S. investors.

The agreement would end years of uncertainty about TikTok’s fate in America that dates back to the first Trump administration.

Under the structure being discussed, a group of new investors including private-equity firm Silver Lake and cloud-computing firm Oracle would own roughly half of the new U.S. entity running TikTok in America. Existing investors would hold about 30%, while ByteDance’s stake would dip just below 20% to comply with the law.

“The TikTok deal is well on its way," Trump said Friday afternoon in the Oval Office.

In 2020, when Trump tried to facilitate a sale of TikTok to Microsoft, he said the company should pay the U.S. Treasury Department for facilitating the deal. “It’s a little bit like the landlord-tenant; without a lease the tenant has nothing, so they pay what’s called ‘key money,’ or they pay something," he said at the time.

​​Trump has taken a series of steps to exert more influence over the private sector in his second term, worrying some Republicans who are wary about the repeated interventions. Administration officials are weighing a plan to spur the construction of factories and other infrastructure using billions of dollars from a fund established during trade negotiations with Japan.

The government also got a “golden share" in Nippon Steel’s takeover of U.S. Steel that gives Trump the ability to appoint a member to the board of Nippon Steel. His approval is needed for many strategic moves by the company.

Write to Miriam Gottfried at Miriam.Gottfried@wsj.com, Amrith Ramkumar at amrith.ramkumar@wsj.com and Alex Leary at alex.leary@wsj.com