In a surprising move, artificial intelligence search engine startup Perplexity AI has reportedly submitted a bid to TikTok’s parent company, ByteDance, to form a new merged entity that would combine Perplexity, TikTok U.S., and additional capital partners, according to CNBC reports.
The new structure aims to allow most of ByteDance’s current investors to retain their equity stakes while integrating Perplexity’s AI capabilities into TikTok’s platform. This merger could enhance video content offerings and potentially fortify TikTok against growing regulatory scrutiny in the United States, a source told CNBC.
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Founded to challenge search giants like Google and OpenAI, Perplexity AI saw its valuation soar from $500 million at the start of 2024 to a staggering $9 billion by the end of the year. The boom in generative AI technologies and the company’s innovations fueled investor enthusiasm, despite controversies over plagiarism claims.
The potential merger comes as TikTok faces a looming ban in the U.S., with ByteDance under pressure to divest its U.S. operations to address national security concerns. ByteDance has resisted selling TikTok, instead exploring alternatives that preserve its stake.
The urgency increased after TikTok warned it might “go dark” in the U.S. starting Jan. 19. As the law took effect and the social video-sharing app shut down for less than 48 hours before it was restored, thanks to President-elect Donald Trump, who declared TikTok was “back” in his victory rally. He also hinted Saturday he would likely grant TikTok 90 more days to finalize a deal after he takes office on Monday.
TikTok CEO Shou Zi Chew addressed the uncertainty in a video posted Friday: “I want to thank President Trump for his commitment to work with us to find a solution that keeps TikTok available in the United States.”
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ByteDance’s resistance to selling TikTok is a key reason Perplexity AI sees its proposal as viable. By framing the bid as a merger rather than a sale, ByteDance could maintain a significant stake while partnering with new investors and innovative AI capabilities.
The valuation of the new entity is expected to exceed $50 billion, though the final figure will depend on how many of ByteDance’s shareholders choose to remain involved versus cashing out, the source revealed.