Perplexity AI Bids to Merge with TikTok U.S. Amid Looming Ban

SAN FRANCISCO, Calif. — Perplexity AI, a U.S.-based search engine startup, submitted a bid on Saturday to merge with TikTok U.S., a move aimed at circumventing a potential ban of the popular social media platform in the United States. The proposal, directed at TikTok’s parent company ByteDance, seeks to create a new entity combining Perplexity, TikTok U.S., and new capital partners, according to sources familiar with the matter.

The bid comes as TikTok faces a U.S. ban starting Sunday unless it severs ties with ByteDance, its Chinese parent company. President-elect Donald Trump indicated on Saturday that he would likely grant TikTok a 90-day extension to negotiate a deal after his inauguration on Monday. TikTok CEO Shou Zi Chew expressed gratitude for Trump’s commitment to finding a solution in a video posted on the platform Friday.

Perplexity AI, valued at over $1 billion, believes its merger proposal has a strong chance of success because it allows ByteDance’s existing investors to retain equity stakes. The proposed structure would also integrate more video content into Perplexity’s AI-driven search tools, which provide users with fast, cited answers to queries using large language models like OpenAI and Meta‘s Llama.

A source close to the negotiations, who requested anonymity due to the confidential nature of the deal, estimated the merger’s value at “well north of $50 billion.” The final price will depend on which ByteDance shareholders choose to remain invested in the new entity and which opt to cash out.

TikTok, which boasts nearly half of all Americans as users, has become a cultural and economic force, empowering small businesses and shaping online trends. However, its ties to China have raised national security concerns, prompting the Biden administration to push for divestment or face a ban. TikTok has warned that it will “go dark” in the U.S. unless the administration assures companies like Apple and Google that they won’t face penalties for hosting the app.

Perplexity AI’s bid represents a bold move in the rapidly evolving tech landscape, where AI-driven search tools are increasingly seen as a disruptive force. The company, which competes with OpenAI and Google, has gained traction amid the generative AI boom, attracting significant investor interest in 2023.

As the clock ticks down to TikTok’s potential ban, the outcome of Perplexity AI’s proposal could reshape the future of both companies and the broader tech industry.