Perplexity AI Proposes Merger with Tiktok’s U.S. Business, Offering 50% Ownership to Government
TL/DR –
Perplexity AI has proposed a revised plan to merge with TikTok’s U.S. business under a new entity that would allow the U.S. government to own up to 50% of it. The proposal, a revision of an earlier plan submitted to TikTok’s parent company ByteDance, would permit the U.S. government to own up to half of the new structure once it makes an initial public offering of at least $300 billion. The new plan also suggests that ByteDance and its existing investors would not have to completely sever ties with TikTok, but ByteDance would have to allow “full U.S. board control” and contribute TikTok’s U.S. business without the proprietary algorithm that fuels the app.
WASHINGTON —
A new proposal by Perplexity AI, an artificial intelligence startup, suggests acquiring up to a 50% stake in a newly formed entity merging with TikTok’s U.S. business. The revision, submitted last week, built upon a previous plan presented to TikTok’s parent ByteDance but received no response.
The earlier proposal aimed to merge San Francisco-based Perplexity with TikTok’s U.S. business, attracting investments from other investors. The latest proposal enables the U.S. government to own half of this new entity after an initial public offering of $300 billion. Government shares would not have voting rights, and they would not gain a seat on the new company’s board.
The plan allows ByteDance to avoid cutting complete ties with TikTok while granting full U.S. board control. ByteDance would contribute TikTok’s U.S. business sans the proprietary algorithm that powers user experiences on the app, in exchange for equity in the new entity.
The proposal echoes the strategy of former treasury secretary Steven Mnuchin, who suggested diluting Chinese ownership could comply with law requirements. Mnuchin expressed previous interest in investing in the company.
The proposal arises amidst numerous investors expressing interest in TikTok. President Trump predicts a resolution within 30 days.
Bipartisan law required TikTok to sever ties with ByteDance by Jan. 19. An executive order from Trump extended this deadline by 75 days. Amidst potential deal discussions, Trump emphasized U.S. benefit as a crucial determinant.
TikTok briefly went offline in the U.S. but resumed operations after Trump delayed the ban. TikTok, once targeted for a U.S. ban by Trump, gained his acknowledgment for influencing younger voters in the previous presidential election.
Congress banned TikTok in the U.S. because of potential security risks from its ownership structure. The Biden administration echoed these concerns, highlighting the risk of allowing a Chinese company to control the app’s algorithm and manage user data. Despite these claims, no public proof of TikTok handing user data to Chinese authorities or meddling with the algorithm has surfaced yet.
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Hadero reported from South Bend, Indiana.
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