Perplexity AI, a U.S.-based search engine startup, has submitted a bid to merge with TikTok’s U.S. operations, according to sources familiar with the matter. The proposal, which was first reported by CNBC, comes as TikTok faces an imminent U.S. ban if it does not sever ties with its Chinese parent company, ByteDance.
The proposed merger would create a new entity by combining TikTok U.S. with New Capital Partners, a private equity firm. Under this structure, ByteDance’s existing investors would retain their equity stakes while integrating Perplexity’s advanced search tools into TikTok’s platform. This approach, according to sources, is seen as a way to comply with U.S. regulations without requiring a direct sale of TikTok’s U.S. operations.
Trump’s Potential Reprieve Offers Hope
The federal ban on TikTok, citing national security concerns, is set to take effect on Sunday. However, President-elect Donald Trump has hinted at granting a 90-day extension on Monday, giving ByteDance more time to resolve the issue. This extension could allow Perplexity AI’s merger proposal to gain traction.
Perplexity AI’s cutting-edge search engine is powered by large language models, including OpenAI’s tools and Meta Platforms’ Llama, which provide fast, citation-backed answers to user queries. The merger would enhance TikTok’s capabilities by incorporating these technologies, potentially attracting a broader user base and increasing engagement.
The Stakes Are High for TikTok
TikTok has become a cultural phenomenon in the U.S., with nearly half the population using the platform for entertainment, business, and social interactions. The platform’s shutdown would leave millions of users stranded and force small businesses to seek alternatives for reaching their audiences.
TikTok announced on Friday that it would go dark in the U.S. unless the Biden administration ensures that companies like Apple and Google won’t face enforcement actions once the ban is implemented. Perplexity AI’s merger bid could be a lifeline, offering a viable path to keep TikTok operational while addressing regulatory concerns.
Uncertain Future but Potential Resolution
Although TikTok has not commented on Perplexity AI’s bid, the proposal offers a creative solution to the app’s predicament. By merging rather than selling, ByteDance could maintain partial ownership while adhering to U.S. legal requirements.
For now, the fate of TikTok hinges on Trump’s decision and whether ByteDance can finalize a deal that satisfies all parties. If the merger is successful, it could set a precedent for how tech companies navigate regulatory challenges in cross-border operations.
