Perplexity AI Revises TikTok Merger, US Gov’t May Acquire 50% Stake

Perplexity AI has updated its proposal to ByteDance, TikTok’s Chinese parent company, aiming to merge its operations with TikTok US.

A source familiar with the matter revealed that the revised proposal, submitted to ByteDance, suggests a new company structure, where the US government could hold a stake of up to 50% following a future initial public offering (IPO).

The revised plan includes the creation of a new holding company called “NewCo.”

According to the source, ByteDance would sell TikTok US to investors, giving existing TikTok stakeholders equity in the new structure.

However, ByteDance would retain ownership of TikTok’s core recommendation algorithm, which is central to the app’s functioning.

The US government’s potential 50% stake would come into play once the new entity goes public with an IPO, which would value the company at a minimum of $300 billion.

Perplexity AI would also allow for its acquisition by the new holding company, contingent on its investors receiving a portion of the equity in NewCo.

CNBC was the first to report the proposal. Last week, TikTok’s services were restored after US President Donald Trump announced that the app would be allowed to operate again in the United States.

Both ByteDance and the White House did not immediately comment on the proposal.

However, on Saturday, President Trump stated he was in discussions with multiple parties regarding a potential acquisition of TikTok, with a decision expected in the next 30 days.

Earlier this month, Reuters reported that Perplexity AI had submitted a merger bid to ByteDance, intending to merge with TikTok US and create a new entity by incorporating New Capital Partners.

The source indicated that Perplexity AI believes the merger model, rather than a straight sale, might increase the chances of success for the deal.