Perplexity AI has put forward a revised merger proposal to the parent company of TikTok, ByteDance, that could see the United States government owning up to 50% of a newly formed entity.
This proposal, which follows months of anticipation surrounding TikTok’s operations in the U.S., aims to address national security issues while maintaining TikTok’s presence in the country.
The proposal suggests creating a new U.S.-based company that would combine Perplexity AI, TikTok’s U.S. operations, and contributions from additional investors.
The U.S. government’s stake in the entity would materialise after an initial public offering (IPO) valued at no less than $300 million, according to details shared with investors and reported by The Associated Press. ByteDance, TikTok’s current Chinese owner, could retain a portion of its ownership under this structure.
The revised plan comes after feedback from the Trump administration, which points to TikTok’s data security and its ties to ByteDance.
President Donald Trump has previously revealed his preference for a U.S. stakeholder to acquire TikTok and showed interest in the government receiving a significant ownership share. “I’d like to see the U.S. government get 50% ownership,” Trump said earlier this month, though it’s not yet certain whether he was referring to government ownership or the U.S. investor participation.
The merger plan places Perplexity AI, a growing company in the artificial intelligence space, to play a fundamental role in the future of TikTok.
A source familiar with the deal noted that Perplexity’s pitch involves maintaining TikTok’s core video-sharing functionalities while ensuring stricter governance and compliance measures. ByteDance’s recommendation algorithm, however, is excluded from the deal, as it is considered a vital proprietary asset.
The financial framework for the merger includes funding from new capital providers, who would facilitate a one-time dividend payment to ByteDance’s existing investors and support the new company’s growth.
Even with ByteDance’s public reluctance to sell TikTok’s U.S. operations outright, this proposed merger—rather than a sale—could make the deal more appealing to the Chinese company, sources say.
While the discussions are ongoing, other companies, including Oracle, Microsoft, and possibly Elon Musk, are reportedly exploring similar acquisition opportunities for TikTok. President Trump has promised a final decision on TikTok’s future in the U.S. within the next 30 days.
TikTok CEO Shou Zi Chew, in a recent video posted on the platform, was positive about resolving the situation: “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.”
