Perplexity AI revises merger proposal with TikTok, offers 50% equity to US, ByteDance to retain algorithm: Report

Aravind Srinivas' Perplexity AI has revised its merger proposal with TikTok owner ByteDance to create a new joint company, Reuters reports. Under the new terms, the US government would be offered up to 50% of the new company in a future IPO at a valuation of at least $300 billion.

What is Perplexity offering TikTok?

Perplexity is reportedly proposing the creation of a new US holding company called "NewCo". ByteDance would reportedly sell TikTok US to the investors, giving the company's existing investors an equity stake in the new structure.

Perplexity is also proposing that ByteDance keep its core recommendation algorithm. The AI search engine is also willing to be acquired by the new holding company if its investors receive a stake in NewCo.

TikTok had been offline in the US for around 14 hours last week in compliance with a federal law that requires the social media app to cut ties with its Chinese parent company or be shut down in the country. After Donald Trump was sworn in as the new US president, he issued an executive order giving the app an additional 75 days to comply with the law.

As things stand, the legality of Trump's executive order is not yet clear, as the ban on TikTok came into effect on January 19, and the short-video app remains unavailable for download on Google's Play Store and Apple's App Store.

Who else could buy TikTok?

A recent NPR report had recently stated that Donald Trump administration is working on a plan to save TikTok by tapping Oracle and a group of outside investors that includes Microsoft to take control of the short-video app. TikTok's Chinese owner ByteDance is said to retain a minority stake in the company, but the reported deal could see the app's algorithm, data collection and software updates controlled by Oracle.

A meeting between White House officials and Oracle executives is said to have taken place on Friday to discuss the potential deal, with another meeting scheduled for next week. Under the agreement, TikTok's American investors could own a majority stake in the app. However, the report adds that the terms of the deal are still being worked out and are subject to change at this stage.