With Perplexity AI a new player enters TikTok's uncertain future
Key Points
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Perplexity AI has proposed merging with TikTok's US operations, creating a new holding company called "NewCo" that could be up to 50% government-owned after an IPO. The deal values the company at a minimum of $300 billion.
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Under the plan, ByteDance would contribute TikTok's US business without its recommendation algorithm. Existing investors could maintain their stakes or cash out. Perplexity, recently valued at $9 billion, would gain access to TikTok's vast video content.
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The proposal comes as TikTok faces increasing scrutiny over its future in the US. Perplexity believes structuring the deal as a merger rather than a sale may be more palatable to ByteDance. Other tech companies like Microsoft have also expressed interest in TikTok's US presence.
Perplexity AI, the company behind an AI-powered search engine, has put forward a plan to merge with TikTok's US operations. The proposal comes as TikTok faces mounting pressure over its future in the United States.
Under the revised proposal reported by CNBC, a new holding company called "NewCo" would be created, with the US government potentially owning up to 50 percent following an IPO. The deal values the company at least $300 billion. ByteDance would contribute TikTok's US operations without its recommendation algorithm, while current investors could either keep their stakes or cash out.
Perplexity, recently valued at $9 billion, would gain access to TikTok's vast video content through the deal. The startup might also integrate its search technology into the platform, potentially expanding its user base significantly. The company already competes with Google in search and recently launched an AI assistant for Android devices.
A merger, not a sale
Perplexity believes this structure might work better than previous proposals since it's framed as a merger rather than a sale - something ByteDance explicitly rejected last year. The competition for TikTok's US presence includes other tech players, with Microsoft and possibly Elon Musk showing interest.
The proposal comes at a critical moment, with President Trump promising a decision within 30 days. TikTok's CEO Shou Zi Chew has publicly expressed support for Trump's willingness to find a solution that keeps the app operating in the US market.
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