Perplexity AI In their fresh and updated proposal, AI and TikTok would merge, with the U.S. government gaining up to 50% ownership of the new company.
The suggestion, which was turned in last week, is an update to an earlier strategy the AI startup had given to ByteDance, the parent company of TikTok, on January 18, the day before the rule banning the app took effect.
According to a person familiar with the situation, Perplexity AI has submitted a fresh, up-to-date proposal to TikTok’s parent company that would let the US government control up to 50% of a new firm that would be created by combining Perplexity with TikTok’s US operations.
The new plan was originally reported by the Associated Press. The accuracy of the AP’s article was confirmed to TechCrunch by a source with knowledge of the deal.
The initial plan, to which ByteDance has not replied, aimed to establish a new framework that would incorporate capital from other investors and combine Perplexity, a San Francisco-based company, with TikTok’s U.S. operation.
In the past, the AI search engine has suggested forming a new business by joining forces with Perplexity, TikTok US, and other investors. According to the AP, the revised deal would allow TikTok’s present Chinese owner ByteDance to keep control of the company while the government would receive its share following an IPO of at least $300 million. According to the source, Perplexity’s proposal was changed in response to input from the Trump administration.
According to reports, Perplexity changed their offer in response to input from the administration of President Donald Trump. The source also says, the government’s shares would not have voting rights if the idea were to succeed. Additionally, the government would not be granted a seat on the board of the new business.
A request for comment was not immediately answered by ByteDance or TikTok.
Due to a regulation requiring ByteDance to sell the app or risk having it banned in the US, TikTok had a temporary outage last weekend. After Trump said that he would issue an executive order extending the sale deadline, it sprang back to life. Additionally, he expressed his desire for the United States to acquire “50% ownership,” albeit it was unclear if he was referring to the government or American investors.
ByteDance’s investors would benefit from the arrangement as it would not have to sever all of its connections with TikTok. However, the individual stated that it would need to provide “complete U.S. board control.”
According to a different story this week, the White House was discussing a deal that would see Oracle, which now supplies the infrastructure for TikTok’s U.S. traffic, take over. When questioned, Trump stated that he had discussed TikTok with “many people” but “not with Oracle.”
According to a document reviewed by the Associated Press, the plan calls for the China-based tech giant to contribute to TikTok’s U.S. business without using the secret algorithm that determines what users see on the app.
The plan appears to follow a tactic that former Treasury Secretary Steven Mnuchin, who served during Trump’s first term, talked about on Fox News’ Sunday Morning Futures on Sunday: a new investor in TikTok could just “dilute down” the Chinese ownership and comply with the legislation. Mnuchin has already indicated that he would want to invest in the business.
He went on to say, “But the technology needs to be disconnected from China.” It must be unplugged from ByteDance. There’s absolutely no way that China would ever let us have something like that in China.”
A number of investors are showing interest in TikTok, which coincides with the Perplexity plan. Late on Saturday, President Donald Trump stated that he anticipates an agreement to be reached within 30 days.
During an Air Force One journey from Las Vegas to Miami, Trump also denied having discussed a deal with Oracle CEO Larry Ellison, even though there was a rumor that Oracle and outside investors were considering acquiring TikTok’s global operations.
“I have a lot of people speaking to me. “Very important individuals,” Trump remarked. The United States will gain a great deal from it, and we are quite interested in it. Only if it benefited the US would I do it.
Ellison resides “right down the road” from Trump’s Mar-a-Lago resort, he said aboard Air Force One, but he added, “I never spoke to Larry about TikTok.” I’ve discussed TikTok with a lot of folks, and they seem really interested in it.
Following Trump’s announcement that he would delay the ban, TikTok reopened in the United States following a temporary outage a week earlier. During his first term, Trump had tried in vain to get the platform banned in the United States. However, he has subsequently changed his mind and acknowledged that the platform helped him attract more young people in the presidential election that was held last year.
Along with a few other tech executives who have been establishing more cordial relations with the new government, Shou Chew, the CEO of TikTok, attended Trump’s inauguration on January 20.
Due to worries that TikTok’s ownership structure posed a security risk, Congress decided to outlaw the app in the United States. For months, the Biden administration argued in court that letting a Chinese business manage the algorithm that determines what users view on the app was too risky. Concerns over user data gathered on the platform were also voiced by officials.
Nevertheless, the United States has not yet made public any proof that TikTok gave Chinese authorities user data or permitted them to alter its algorithm.