Perplexity AI Proposes TikTok Merger with 50% U.S. Stake

The US government may own up to 50% of the new company's shares post-IPO, valued at $300B, but without voting rights or a board seat.

Written By:
Ronak Kumar

Reviewed By:
Dhara Chavda

Last updated: January 27, 2025 4:02 PM

Published January 27, 2025 11:39 AM

Last updated: January 27, 2025 4:02 PM

Published January 27, 2025 11:39 AM

Perplexity AI has modified its merger agreement with ByteDance to establish a new U.S. company that combines TikTok U.S. operations with Perplexity AI. Sources indicate ByteDance will create a holding company called “NewCo” by combining TikTok U.S. operations with Perplexity AI.

ByteDance plans to sell TikTok U.S. operations to a group of investors who will receive NewCo equity alongside current TikTok stakeholders. The core TikTok recommendation algorithm will stay with ByteDance as part of the agreement.

According to Reuters, the U.S. government would gain up to 50% ownership of NewCo after an IPO, provided the company reaches a minimum $300 billion valuation. Perplexity AI has suggested NewCo should acquire their company to provide equity ownership to investors.

The U.S. saw TikTok services return last week after President Donald Trump announced the app’s operations could resume. American law raised national security concerns, which led TikTok to stop its U.S. services.

Trump announced that parties negotiating TikTok’s future will reach a verdict within thirty days. The White House and ByteDance have declined to provide statements about the proposal.

The new proposal represents a major transformation for TikTok’s American operations by addressing both security concerns and maintaining user engagement. Both investors and users follow the ongoing story with keen interest.