Perplexity AI's Revised Merger Proposal with TikTok: U.S. Government to Own 50%, No Voting Power

Perplexity AI Revises TikTok Merger Proposal with 50% U.S. Government Stake

Perplexity AI has adjusted its merger proposal to ByteDance, TikTok’s Chinese parent, with a fresh offer that would see the U.S. government hold up to 50% of the new company formed by combining Perplexity and TikTok U.S.

This new structure aims to secure U.S. interests while addressing regulatory concerns.

According to a source familiar with the discussions, this revision, submitted last week, builds on an earlier proposal presented on 18 January, the day before a U.S. law banning TikTok came into effect.

U.S. Government Involvement in the New Entity

The updated proposal aims for the U.S. government to own a significant portion of the new entity post-initial public offering (IPO), set to value the company at a minimum of $300 billion.

However, the government stake would not include voting rights, and officials would not gain a seat on the board.

The idea of government ownership is positioned as a way to alleviate security concerns linked to TikTok’s Chinese ownership while maintaining ByteDance’s partial involvement.

A source said that Perplexity AI tailored the revised bid in response to feedback from the Trump administration, which has shown keen interest in having U.S. oversight over the company’s operations.

Despite the government’s stake, the company would not entirely sever ties with ByteDance.

Instead, ByteDance would retain its stake but forfeit control over TikTok’s U.S. operations.

ByteDance's Role and TikTok’s Algorithm

ByteDance's contribution would be limited to TikTok’s U.S. business, excluding the proprietary algorithm that determines content for users.

This move is in line with previous discussions, including those by former Treasury Secretary Steven Mnuchin, who suggested a dilution of Chinese ownership as a possible solution.

Mnuchin also emphasised the necessity of disconnecting the technology from China, stating,

“The technology needs to be disconnected from ByteDance. There’s absolutely no way that China would ever let us have something like that in China.”

Investors Eye TikTok as Trump Pushes for a Decision

Several investors, including notable figures such as Larry Ellison, are reportedly considering bids for TikTok, which has stirred U.S. political and business circles.

On a recent flight from Las Vegas to Miami, President Trump expressed that many influential people were showing interest in the app, adding,

"The United States will be a big beneficiary."

However, he stressed that any deal must benefit the U.S., making it clear that the future of TikTok will depend heavily on domestic interests.

President Trump also mentioned on Fox News that he was in talks with multiple parties over the platform's future, while maintaining that the decision would come within 30 days.

U.S. Law Pushing TikTok’s Ownership Changes

Under a law passed last year, TikTok was required to cut ties with ByteDance or face a ban in the U.S. by 19 January.

Despite the law, the Supreme Court upheld a temporary halt to enforcement after President Trump issued an executive order delaying the ban for 75 days.

TikTok’s brief shutdown in the U.S. last week was reversed after Trump intervened, continuing the debate over its fate.

The Biden administration has also expressed concerns over national security, citing risks related to TikTok’s ownership structure and the data it collects.

However, no conclusive evidence has been presented linking the app to Chinese authorities, leaving the situation in a state of flux as discussions continue.