Perplexity AI revises TikTok merger, offers 50% equity to US, ByteDance keeps algorithm

Photo: Reuters

Perplexity AI, led by Aravind Srinivas, has made some changes to its merger plan with ByteDance, the owner of TikTok. According to a report by Reuters, the new proposal is focused on creating a joint company, where the US government could own up to 50% of the new company in a future IPO. This new company could be valued at around $300 billion. In this updated deal, ByteDance would sell TikTok's US operations to investors, while still keeping control of its core recommendation algorithm, which helps TikTok suggest videos to users.

What exactly is Perplexity offering TikTok? Perplexity is suggesting the creation of a new US holding company, which would be called "NewCo." Under this plan, ByteDance would sell TikTok's operations in the United States to investors, and these investors would receive shares in the new company. However, ByteDance would still keep its recommendation algorithm, which is a critical part of how TikTok works. Additionally, Perplexity is willing to be acquired by this new holding company, provided that its investors get a stake in NewCo as well.

A few weeks ago, TikTok was offline in the US for about 14 hours because of a federal law. This law requires TikTok to cut ties with its Chinese parent company or face being banned in the US. When Donald Trump became president, he signed an executive order giving TikTok an extra 75 days to follow this law. The legality of this order is still unclear, and since January 19, TikTok has been unavailable for download on both the Google Play Store and Apple’s App Store.

Who else is interested in buying TikTok? According to a recent report from NPR, the Trump administration had been working on a plan to save TikTok. This plan involved a partnership between Oracle, a tech company, and a group of outside investors, including Microsoft, to take control of TikTok in the US. ByteDance would likely keep a small ownership stake, but Oracle could gain control over TikTok’s algorithm, data collection, and software updates. There was even a meeting between White House officials and Oracle executives to discuss this potential deal, and another meeting is scheduled for next week. Under this plan, American investors in TikTok could own a majority stake in the company. However, the details of this deal are still being worked on and could change in the future.

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