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Perplexity AI, a U.S. search engine start-up has revised its merger proposal for TikTok. Sources knowledgeable about the matter say this strategy seeks to merge Perplexity AI and TikTok U.S. to establish a new company.
U.S. Government’s Stake in the New Company
The revised proposal suggests that the U.S. government could own up to 50% of the new company after an Initial Public Offering (IPO). The IPO would require a valuation of at least $300 billion.
Perplexity AI has suggested forming a U.S.-based holding company named “NewCo” to help speed the process. Under this arrangement, ByteDance would sell TikTok U.S. to investors so that current stakeholders of TikTok might receive equity in the fresh company.
Exclusion of TikTok’s Core Algorithm
The proposal specifically excludes TikTok’s core recommendation algorithm. ByteDance would retain ownership of this technology, sources said.
Read more: Trump in Talks With Multiple People About TikTok Purchase
Perplexity’s Role in the New Entity
Perplexity AI has also proposed that it could be acquired by the holding company. In this scenario, Perplexity’s investors would receive shares in the new structure, aligning both companies under “NewCo.”
TikTok’s Recent U.S. Operations
TikTok recently restored its services for U.S. users after an earlier shutdown. The app was initially blocked due to a law citing national security concerns. However, former President Donald Trump announced he would work to restore the app’s access in the country.
On Saturday, Trump stated, “I’m in talks with multiple people over buying TikTok and will likely have a decision in the next 30 days.”
Background of the Proposal
Earlier this month, sources revealed that Perplexity AI submitted a bid to ByteDance for this merger. The plan involves combining Perplexity AI and TikTok U.S. to create a unified company under a new entity.
Additionally, Perplexity AI believes this merger proposal may succeed because it is structured as a partnership rather than an outright sale. This distinction could make the deal more appealing to ByteDance and U.S. regulators.
By introducing this revised plan, Perplexity AI aims to navigate the complex regulatory concerns surrounding TikTok while creating a mutually beneficial solution for all parties involved.
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