TikTok

Perplexity AI proposes $300bn merger with TikTok’s US arm

Core recommendation algorithm will remain under the control of ByteDance under deal's terms
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Image: TikTok

28 January 2025

In a recent development, Perplexity AI revised its proposal to merge with TikTok US with the goal of creating a new company. This revised plan includes the possibility for the US government to own up to 50% of this new entity at the time of the IPO, according to sources close to the negotiations.

A document outlining these arrangements, shared by Perplexity AI with ByteDance – the parent company of TikTok – suggests a structure centered around a US holding company called NewCo. This framework suggests that ByteDance transfer ownership of TikTok US to investors, with existing TikTok investors receiving shares in the newly formed entity. It is important to note that TikTok’s core recommendation algorithm would remain under the control of ByteDance, as stated in the proposal.

The proposed value for this new company during the IPO is estimated to be at least $300 billion, with the US government securing its stake at that time. Perplexity AI has also expressed its willingness to be acquired by NewCo under the condition that its investors receive a portion of NewCo’s equity.

This proposal follows recent events in which TikTok services were restored after a suspension due to national security concerns. President Trump had previously announced plans to temporarily restore access to the app upon his return to power.

Neither ByteDance nor the White House have yet responded to requests for comment on this development. President Trump recently stated that talks were ongoing with several parties about a possible acquisition of TikTok and expected an announcement on the future of the app within a month.

It is worth noting that earlier this month reports surfaced of Perplexity AI making a bid to ByteDance for a merger with TikTok US, with the goal of combining it with New Capital Partners.

Sources indicate that Perplexity AI is optimistic about the success of this proposal, largely because of the structured framework as opposed to a direct sale.

Business AM

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