Perplexity Submits Revised Proposal For Merging With TikTok US
Key Takeaways
- Perplexity AI has submitted a revised proposal for acquiring TikTok’s US business after feedback from the Trump administration.
- The new arrangement will allow the US government to own 50% of the new entity,
- A $300 million IPO can be expected following the formation of the new entity.
Perplexity AI, the billion-dollar AI company that’s competing with OpenAI and Google for a piece of TikTok, has revised its merger proposal with ByteDance. It now proposes to create a new US holding company called NewCo that will combine the two entities, TikTok US and Perplexity AI. The US government could own up to 50% of the said entity following an IPO.
In this merger, ByteDance would offer TikTok US (without its recommendation algorithm, though) for a stake in the new company. On the other hand, Perplexity AI would offer its own equity, meaning its investors would receive shares in the new US holding company.
Tiktok’s current owner, Chinese company ByteDance will retain ownership under this arrangement and the US government will receive its stake after making an initial public offering of at least $300 million.
In the first bid, Perplexity AI wanted to form a new entity containing partners from TikTok US, Perplexity, and other equity partners. However, following feedback from the Trump administration, this arrangement was changed.
A Viable Attempt to Let TikTok Stay in the U.S.
Last weekend, TikTok was taken down as a law was passed requiring ByteDance to either sell the app or have it banned in the US. The app was temporarily restored when Trump suggested that an American stakeholder purchase TikTok, with plans to sell a 50% stake to the U.S. government.
The Ban on TikTok shook the American youth to its core as it was not just a social media app but the primary platform for several content creators in the country, and losing it felt like losing both a community they had worked hard to build, and their primary source of income at once.
While ByteDance isn’t ready to sell the platform entirely, TikTok CEO Shou Zi Chew expressed gratitude for Trump’s commitment to finding a solution for TikTok’s future in the U.S.
The proposal allows most of ByteDance’s existing investors to retain their equity in the new entity. It also brings more video content to Perplexity AI, if the AI company becomes a partner in the merger, making it a win-win situation for both parties.
There were reports that the White House wanted to get Oracle into the deal since it already provides infra to TikTok in the US. However, Trump denied such claims.
He has announced that the future of TikTok in the US will be known for certain within the next 30 days.
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View all articles by Alpa Somaiya
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