Perplexity AI has submitted a revised proposal to ByteDance, TikTok’s parent company, outlining a potential merger that could grant the U.S. government up to 50% ownership of the new entity. This proposal is an update to a previous plan presented on January 18, just before a law banning TikTok in the U.S. was set to take effect.
The new proposal aims to create a merged entity combining Perplexity with TikTok’s U.S. operations, which will allow the U.S. government to acquire its stake after an initial public offering (IPO) valued at a minimum of $300 billion. The revision was made based on feedback from the Trump administration.
If successful, the government’s shares would not carry voting power, and it would not have a seat on the new company’s board. The plan allows ByteDance to maintain some ties with TikTok, which is favourable for its investors, but requires full U.S. board control. TikTok’s U.S. business would be transferred without its proprietary algorithm, as per a document seen by the Associated Press.
Reportedly, the Trump administration is negotiating a deal for Oracle and U.S. investors to take control of TikTok’s global operations, with ByteDance retaining a minority stake. The arrangement aims to address national security concerns by having Oracle oversee TikTok’s algorithm, data collection, and software updates.
This move follows a congressional mandate requiring TikTok to divest from its Chinese parent company or face a U.S. ban. The deal’s specifics are still being finalised, with other potential investors like Microsoft involved in the talks.
TikTok’s future in the U.S. has been uncertain due to bipartisan concerns over its ownership structure and potential security risks. Despite these concerns, no public evidence has emerged of TikTok sharing user data with Chinese authorities or altering its algorithm at their request. The Supreme Court upheld a law banning TikTok unless it severed ties with ByteDance, but Trump issued an executive order delaying enforcement for 75 days.