- AI startup Perplexity AI has proposed a bid to TikTok’s parent company, ByteDance, which could result in the U.S. government owning up to 50% of a new entity.
- The revised proposal allows the U.S. government to own half of the new structure after an initial public offering of at least $300 billion.
- The proposal comes as several investors express interest in TikTok, with a deal expected within 30 days.
- If successful, the proposal could set a new precedent in the tech industry regarding foreign ownership and national security concerns.
In a significant development in the tech world, Perplexity AI, a San Francisco-based artificial intelligence startup, has proposed a new bid to TikTok’s parent company, ByteDance. The proposal, if accepted, could result in the U.S. government owning up to 50% of a new entity that merges Perplexity with TikTok’s U.S. business. This information comes from an anonymous source who was not authorized to speak about the proposal.
The proposal, submitted last week, is a revision of a prior plan that Perplexity had presented to ByteDance on January 18, a day before the law banning TikTok went into effect. The initial proposal, which ByteDance has yet to respond to, sought to create a new structure that would merge Perplexity with TikTok’s U.S. business and include investments from other investors.
Revised Proposal and Government Ownership
The revised proposal, however, would allow the U.S. government to own up to half of that new structure once it makes an initial public offering of at least $300 billion. The source revealed that the proposal was revised based on feedback from the Trump administration. If the plan is successful, the shares owned by the government would not have voting power, and the government would not get a seat on the new company’s board.
Under the proposed plan, ByteDance would not have to completely sever ties with TikTok, a favorable outcome for its investors. However, it would have to allow a full U.S. board control. The China-based tech company would contribute TikTok’s U.S. business without the proprietary algorithm that fuels what users see on the app, according to a document seen by the Associated Press.
Investor Interest and Legal Implications
The proposal seems to mirror a strategy discussed by Steven Mnuchin, treasury secretary during Trump’s first term. Mnuchin suggested that a new investor in TikTok could simply “dilute down” the Chinese ownership and satisfy the law. He has previously expressed interest in investing in the company. However, he emphasized that the technology needs to be disconnected from China and ByteDance.
The Perplexity proposal comes at a time when several investors are expressing interest in TikTok. President Donald Trump said late Saturday that he expects a deal will be made in as soon as 30 days. He also mentioned that he hadn’t discussed a deal with Larry Ellison, CEO of software maker Oracle, despite a report that Oracle, along with outside investors, was considering taking over TikTok’s global operation.
Under a bipartisan law passed last year, TikTok was to be banned in the United States by January 19 if it did not cut ties with ByteDance. The Supreme Court upheld the law, but Trump then issued an executive order to halt enforcement of the law for 75 days.
This situation is reminiscent of the 2018 case where the U.S. government blocked Broadcom’s proposed buyout of Qualcomm, citing similar concerns over national security and the protection of technological innovation. The Perplexity proposal, if successful, could set a new precedent in the tech industry, particularly in situations involving foreign ownership and national security concerns. The proposal’s outcome could significantly impact the future of TikTok’s U.S. operations and the broader tech industry.