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Perplexity AI Proposes New Structure for TikTok in U.S.
Perplexity AI has put forth a significant proposal to TikTok’s parent company, ByteDance, which would enable the United States government to stake up to a 50% ownership in a newly formed entity comprising Perplexity and TikTok’s U.S. operations. This development was disclosed by a source familiar with the matter.
The updated plan, submitted last week, is a revision of an earlier proposal presented to ByteDance on January 18, right before the implementation of legislation banning TikTok in the U.S.
In the initial proposal, which remains unanswered by ByteDance, Perplexity sought to integrate its operations in San Francisco with TikTok’s U.S. business and allow for investment from additional partners.
The latest version of the proposal specifies that the U.S. government could acquire up to half of the new entity once it conducts an initial public offering valued at a minimum of $300 billion. This adjusted proposal was reportedly crafted in response to input from the Trump administration.
Should this initiative succeed, the government’s shares would be non-voting, and it would not hold a position on the new company’s board, according to the source, who spoke anonymously as they were not authorized to discuss the proposal publicly.
ByteDance and TikTok have not yet provided comments regarding the proposal.
This restructuring would allow ByteDance to maintain some connection to TikTok, which could be seen as a positive outcome for its investors. However, it would entail the stipulation of full U.S. board oversight, as indicated by the source.
Additionally, under this revised proposal, ByteDance would contribute TikTok’s U.S. operations but would not be transferring the proprietary algorithm that dictates user experiences on the app, as noted in a document reviewed by the Associated Press.
The framework appears to resonate with strategies discussed by Steven Mnuchin, the former Treasury Secretary during President Donald Trump’s administration, who suggested during a recent appearance on Fox News that new investment in TikTok could effectively dilute Chinese ownership and address legal requirements. Mnuchin has previously shown interest in investing in the platform.
“However, the technology needs to be dissociated from China,” Mnuchin asserted. “It needs to be separated from ByteDance. There’s no possibility that China would permit something like that within its borders.”
This proposal comes amid growing interest from various investors in TikTok. Trump expressed optimism on Saturday, stating he expects a deal could materialize within the next 30 days.
During a flight from Las Vegas to Miami on Air Force One, Trump mentioned that he had not engaged in discussions with Oracle’s CEO, Larry Ellison, despite reports suggesting Oracle and other investors were exploring a takeover of TikTok’s global operations.
“There are numerous parties talking to me—very significant individuals,” Trump remarked. “We have substantial interest, and I believe the United States stands to gain greatly from this transaction… It would only proceed if it benefits the U.S.”
In accordance with a bipartisan law passed the previous year, TikTok faced a potential ban in the U.S. effective January 19 unless it severed ties with ByteDance. Though the Supreme Court upheld this law, Trump subsequently issued an executive order pausing its enforcement for 75 days.
On Air Force One, Trump acknowledged that Ellison resides close to his Mar-a-Lago estate but reiterated, “I have not discussed TikTok with Larry. I’ve spoken with many about TikTok, and there’s tremendous interest.”
TikTok experienced a brief cessation of operations in the U.S. recently but resumed services after Trump indicated his intention to delay the ban. During his first term, Trump had attempted to impose a ban on the platform, but he has since altered his stance and credited TikTok with helping him attract younger voters in the last election.
TikTok’s CEO, Shou Chew, attended Trump’s inauguration on January 20, alongside other tech leaders seeking to foster closer relations with the new administration.
Congress’s decision to pursue a TikTok ban stemmed from concerns regarding the ownership structure’s potential security implications. The Biden administration argued extensively in court that allowing a Chinese company to manipulate the algorithm influencing user content posed significant risks. There were also worries about the handling of user data collected on the platform.
Despite these concerns, the U.S. government has yet to release concrete evidence of TikTok transferring user data to Chinese authorities or permitting access to its algorithm.
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