Perplexity AI submitted a revised merger proposal to TikTok’s Chinese parent ByteDance as the popular video-sharing app stares down a national ban, according to multiple reports.
Under the new proposal, the US government would own up to half of the company after a future initial public offering, a source familiar with the matter told CNBC.
A Perplexity document shared with ByteDance and new investors proposed the creation of a new US holding company called “NewCo,” the person said.
As part of the deal, ByteDance would sell TikTok US to these new investors, according to the report.
The parent company would keep TikTok’s core recommendation algorithm for itself under the deal.
After NewCo completes a public offering at a valuation of at least $300 billion, the US government would own up to half of the new structure.
Perplexity AI – which started 2024 with a roughly $500 million valuation and ended the year at about $9 billion – would also offer itself to the holding company, if its own investors receive some of the NewCo equity.
The Trump administration is reportedly working on a plan to save TikTok by tapping software giant Oracle to run the app’s operations.
ByteDance and Perplexity AI did not immediately respond to requests for comment.
Perplexity AI’s proposed merger could be more likely to succeed than other bids, since it is not a sale, a source told Reuters.
The bidding war for TikTok started after the Biden administration passed a divest-or-sell law that went into effect Jan. 19, the day before Trump took office.
TikTok briefly shut down before Trump signed an executive order last week that gives Bytedance an additional 75 days to make a deal.
TikTok’s owners had previously ruled not selling the app, which US officials claim poses a national security threat and because it could put US users’ personal data at risk.
On Saturday, Trump said he would likely have a decision on the app’s future in the US within the next 30 days.
Separately, billionaire Frank McCourt, “Shark Tank” star Kevin O’Leary and YouTube influencer Mr. Beast have made overtures about buying TikTok.
With Post wires