The Bid to Merge with Tiktok by Perplexity AI

With a TikTok ban coming in the United States, Perplexity AI is the latest bidder seeking to offer the video app a new corporate home.

Perplexity’s interest was reported initially by CNBC. A person familiar with the matter revealed to TechCrunch that Perplexity (whose CEO Aravind Srinivas is shown above) had made an offer to merge with TikTok US.

Perplexity AI launched an official bid for TikTok on Saturday, submitting a proposal to its parent firm, ByteDance, to form a new amalgamated organization that would include Perplexity, TikTok U.S., and new finance partners, according to CNBC.

According to a source familiar with the matter, the new structure would allow the majority of ByteDance’s existing investors to keep their ownership shares while also bringing additional content to Perplexity. The source requested anonymity owing to the confidentiality of the possible arrangement.

Perplexity AI, an artificial intelligence search engine startup competing with OpenAI and Google, began 2024 with a valuation of around $500 million and ended the year with a valuation of around $9 billion, thanks to increased investor interest in the generative AI boom — as well as controversy over plagiarism accusations.

Investors have identified AI-assisted search as one of Google’s major risks, as it has the potential to alter the way consumers access information online. Last year, OpenAI, which started the generative AI craze in late 2022 with ChatGPT, launched SearchGPT, a search engine. Google later launched “AI Overviews” in search, which allows users to see a quick summary of answers at the top of results.

The source also confirmed that the bid would create a new entity combining Perplexity, TikTok US, and new equity partners; that most investors in TikTok’s parent company ByteDance would be able to retain their equity; and that Perplexity hopes to bring more video to its AI search engine through the merger.

A regulation mandating ByteDance to either sell TikTok or have it banned in the United States goes into force on Sunday, January 19. That will be President Joe Biden’s final day in office, and officials from his administration have stated that the actual execution of the ban will be left to the “next administration.”

Though any potential transaction between Perplexity AI and ByteDance would likely take months to complete — and TikTok has said the app will “go dark” in the United States on Sunday unless the Biden administration assures it will not punish Apple, Google, and other service providers for hosting it — President-elect Donald Trump told NBC News on Saturday that he “most likely” would give TikTok 90 more days to work out a deal after he is sworn into office on Monday.

In a TikTok video posted on Friday, CEO Shou Zi Chew stated, “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.”

Meanwhile, President-elect Donald Trump, who will be inaugurated on Monday, stated that he would “most likely” grant TikTok a 90-day extension, and TikTok’s CEO produced a video praising Trump for his efforts.

However, TikTok has stated that without further explicit promises of non-enforcement from the Biden administration, it will be “forced to go dark” on Sunday.

Despite several buyers showing interest in TikTok, ByteDance has repeatedly stated that it does not intend to sell. (The corporation described a story that the Chinese government is amenable to Elon Musk’s takeover as “pure fiction.”) According to CNBC, Perplexity hopes to overcome these misgivings by proposing a merger rather than a sale.

ByteDance has officially stated that it will not sell TikTok U.S., which is one of the reasons Perplexity AI believes it has a chance with its bid – the plan is a merger rather than a sale, according to CNBC.

The source feels a fair price is “well north of $50 billion,” but the ultimate value connected to the proposal will be determined, in part, by which of ByteDance’s existing shareholders want to stay in the new firm and which want to cash out.