With Perplexity AI a new player enters TikTok's uncertain future

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.