Perplexity AI's TikTok merge could give US government a 50% stake with no board seat
Though, the deal promises that it won't have a board seat or voting power.
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Key notes
- Perplexity AI revised its merger proposal with TikTok’s parent, ByteDance, suggesting a US-based holding company called NewCo.
- The deal excludes TikTok’s algorithm and allows the U.S. government to acquire up to 50% ownership, with no voting power.
- Other potential buyers, including Oracle, Elon Musk, and Amazon, are also interested in acquiring TikTok’s US operations.
Perplexity AI, the AI-powered search engine startup that competes with OpenAI and Google, has now recently revised its merger proposal with TikTok’s parent company, ByteDance.
The new suggestion proposes the creation of a US-based holding company called NewCo that would combine Perplexity and TikTok’s operation in the US.
It also excludes TikTok’s core recommendation algorith and lets the US government acquire up to a 50% stake in the new company after a future IPO. Though, the government’s shares wouldn’t have voting power or a board seat.
ByteDance has strongly declared that it won’t sell TikTok’s US operation, so Perplexity frames the deal as a merger instead. The funding would come from a new third-party capital with ByteDance investors receiving equity or a one-time dividend.
Despite Trump’s initial stance to ban TikTok during his first reign, the US president promised not to ban the popular video-sharing app. Still, a mass exodus of American TikTok (refugee) users was inevitable, with people migrating to an actually Chinese-owned app called RedNote.
TikTok even went totally black and out of service for less than 24 hours on January 18, not too long before Trump went to the office.
But Perplexity AI isn’t the only one in the race to TikTok’s sale, or its solution to save its US operation.
Oracle, led by billionaire Larry Ellison, is reportedly in talks with the Trump administration about a deal to take a majority stake in TikTok, with other investors like Microsoft potentially involved. Other potential buyers include Elon Musk, YouTuber MrBeast, Project Liberty, and Amazon.
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