WASHINGTON — Perplexity AI has put forward a new proposal to TikTok’s parent company, which would grant the U.S. government the opportunity to hold up to 50% ownership in a new entity formed by merging Perplexity with TikTok’s U.S. operations. This information has been disclosed by a source familiar with the discussions.
The newly proposed structure, which was submitted last week, revises an earlier plan presented by the AI startup to ByteDance on January 18, just a day before a law banning TikTok was enacted. In its initial proposal, which has gone without a response from ByteDance, Perplexity aimed to create an organization combining its San Francisco-based operations with TikTok’s U.S. business while inviting investments from various other stakeholders.
Under the revised proposal, the U.S. government would be able to obtain up to half ownership of this new entity after it conducts an initial public offering with a minimum valuation of $300 billion. The source, who requested anonymity, mentioned that this update was made in response to input from the Trump administration. If the plan were to be implemented, the government shares would be non-voting, and there would not be a government representative on the company’s board.
ByteDance and TikTok have not provided any comments in response to requests regarding the latest proposal. The arrangement would permit ByteDance to maintain some connection to TikTok, which may be viewed positively by its investors. However, it would need to facilitate full control of the board to U.S. executives, according to the source.
As part of the proposal, ByteDance would contribute TikTok’s operations in the U.S. while excluding the proprietary algorithm that determines content visibility on the app. In return, existing investors of ByteDance would receive equity shares in the newly formed entity.
This initiative reflects a strategy earlier discussed by Steven Mnuchin, who served as treasury secretary during Trump’s first term. In a recent appearance on Fox News’ Sunday Morning Futures, Mnuchin suggested that bringing in new investment could effectively lessen the Chinese ownership stake and comply with U.S. regulations. He has shown interest in investing in the platform.
Mnuchin emphasized the necessity for disconnecting TikTok’s technology from China and ByteDance, indicating that China would not permit any such arrangement. The Perplexity proposal emerges amid growing investor interest in TikTok. In a statement, former President Donald Trump mentioned that he anticipates a resolution within a month.
During a flight from Las Vegas to Miami aboard Air Force One, Trump remarked that although he had not engaged in discussions regarding TikTok with Oracle CEO Larry Ellison, there were significant conversations taking place regarding the platform’s future. “Numerous people are talking to me. Very substantial people,” he stated, reinforcing that any deal should ultimately benefit the United States.
Under a bipartisan law enacted last year, TikTok was to be banned in the U.S. by January 19 unless it severed its relationship with ByteDance. While the Supreme Court upheld the law, Trump later issued an executive order that temporarily suspended its enforcement for 75 days.
Trump also noted that Ellison resides in close proximity to his Mar-a-Lago estate but reiterated that he had not directly discussed TikTok with him, highlighting that various parties had shown substantial interest in the platform’s operations. Recently, TikTok experienced a brief shutdown in the U.S. but resumed operations after Trump indicated a delay in the ban. Initially, he had sought to ban TikTok during his previous term but has since softened his stance, crediting the platform for attracting younger voters in the last election.
The CEO of TikTok, Shou Chew, attended Trump’s inauguration alongside several other tech leaders nurturing more favorable relations with the administration. Congress’s decision to ban TikTok stemmed from concerns regarding the platform’s ownership structure and its potential security risks. The Biden administration spent months in legal battles asserting that allowing a Chinese company to oversee the app’s algorithm presented significant risks due to potential user data privacy concerns. Nonetheless, no public evidence has yet been presented indicating that TikTok has shared user data with Chinese authorities or permitted modifications to its algorithm.
