In context: Artificial intelligence startup Perplexity AI recently proposed a merger with ByteDance’s TikTok US operations. As part of a revised plan, the company has offered to allocate up to 50 percent of the combined entity to the US government.
The revised plan reportedly includes provisions for the US government to receive stock in the new company once Perplexity AI achieves an initial public offering valued at a minimum of $300 billion. However, these would be non-voting shares, meaning the US government would hold 50 percent ownership of the company but have no influence over TikTok’s day-to-day operations. Additionally, the government would not be granted a seat on the merged entity’s board.
According to a source quoted by Reuters, the proposed holding company would be tentatively named “NewCo” and include investments from TikTok’s current stakeholders. Perplexity AI has also expressed willingness to be acquired by the holding company, provided its investors receive a share of NewCo’s equity.
The revised plan comes just over a week after Perplexity AI submitted its initial merger proposal, which ByteDance did not respond to. Reportedly, the updates to the plan were made following feedback from the Trump administration. However, even if the offer is accepted this time, the merged entity will not gain access to ByteDance’s prized recommendation algorithm, widely regarded as the key to TikTok’s meteoric rise as a social media phenomenon.
Perplexity AI is far from the only party interested in taking over TikTok. On Saturday, Donald Trump claimed that “numerous people” had expressed interest in investing in the company. However, he denied discussing the matter with Oracle CEO and close ally Larry Ellison. Both Oracle and Microsoft are reportedly in talks to negotiate a TikTok acquisition in a deal that could allow ByteDance to retain a minority stake in the app.
TikTok briefly went dark in the US on January 19 after the Supreme Court upheld a bipartisan law requiring ByteDance to sell the app to an American entity by the same date or face a nationwide ban. The following day, Trump took office and issued an executive order reversing the ban, granting TikTok an additional 75 days to sever ties with its Chinese parent company.
