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Perplexity AI has modified its proposal to merge with TikTok’s US division, granting the US government the option to acquire a 50 per cent stake of the new company if it goes public.
The TikTok-Perplexity merged entity would be a US-based holding company called ‘NewCo’, according to a report by CNBC.
The US government’s 50 per cent ownership claim would reportedly come into play after a NewCo IPO in the future.
The document submitted to TikTok’s China-based parent company, ByteDance, proposes to give existing investors equity in NewCo as a trade for TikTok’s US operations, excluding its core recommendation algorithm, as per the report.
It further suggests a “one-time dividend payment to ByteDance investors in exchange for simplified governance,” with “new third-party capital provider(s) (to be mutually agreed upon)” putting up the money for the merger.
Perplexity’s investors would also reportedly receive NewCo equity as part of the proposed merger.
Rivaling Google and OpenAI, the AI search engine startup had been valued at a staggering $9 billion.
It had attracted both investor interest as well as controversy sparked by accusations of plagiarism.
TikTok was briefly shut down in the US only to be temporarily restored after President Donald Trump intervened and delayed the enforcement of a law that forces ByteDance to divest TikTok or face a ban.
“I would like the United States to have a 50 percent ownership position in a joint venture. By doing this, we save TikTok, keep it in good hands and allow it to stay up,” Trump had said in a post on Truth Social.
In a video posted on TikTok earlier this month, Chief Executive Officer Shou Zi Chew said, “I want to thank President Trump for his commitment to work with us to find a solution that keeps TikTok available in the United States.”
On Saturday, January 25, Trump said he was in talks with multiple people over buying TikTok and would likely have a decision on the app’s future in the next 30 days.
Besides Perplexity, several other companies and individuals have put in their bids to either purchase or merge with TikTok, including Microsoft and Oracle.
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