Perplexity AI Proposes TikTok U.S. Merger with U.S. Government Stake

Perplexity AI has revised its merger proposal to ByteDance, TikTok's Chinese parent company, aiming to create a new U.S.-based entity, according to sources. The plan suggests that the U.S. government could own up to 50% of the entity after a future IPO with a valuation of at least $300 billion.

The proposal involves forming a holding company, "NewCo," which would acquire TikTok U.S. ByteDance would retain TikTok's core recommendation algorithm but sell its U.S. operations to investors, including TikTok's existing stakeholders. Perplexity AI offered to merge with NewCo, allowing its own investors to receive equity in the newly created entity.

TikTok U.S. recently resumed services after a shutdown linked to national security concerns. President Donald Trump confirmed discussions on TikTok's future and stated decisions are expected within 30 days. The revised proposal reportedly strengthens Perplexity’s bid, as it positions the deal as a merger, not an outright sale.

ByteDance and the White House have not commented on the proposal. Earlier reports indicated that Perplexity’s initial bid involved merging with TikTok and combining the entity with New Capital Partners. This move aligns with Perplexity’s belief that a merger approach would succeed over a sale.

This development follows a contentious history of TikTok's U.S. operations, with debates centered on data security and control. Perplexity’s proposal aims to balance regulatory concerns and business continuity by involving the U.S. government in the new structure.

The potential merger reflects evolving strategies to address geopolitical challenges while ensuring TikTok's growth in the U.S. market. ByteDance’s decision will shape the future of TikTok and its operational framework.