In a bid to address national security concerns surrounding TikTok, Perplexity AI has proposed a merger with TikTok's US operations, offering the US government a potential stake of up to 50 percent. The proposal, which aims to dilute Chinese ownership, is under consideration by TikTok's parent company, ByteDance.
WASHINGTON, D.C. — Perplexity AI has presented a novel proposal to TikTok's parent company, ByteDance, outlining a potential merger between Perplexity and TikTok's US operations. This proposal, submitted last week, represents a revised iteration of an earlier plan introduced by Perplexity on January 18th, preceding the enactment of the law that targeted TikTok's operations in the US.
The initial proposal, which awaits a response from ByteDance, aimed to establish a new entity encompassing both Perplexity, based in San Francisco, and TikTok's US business, with investments from additional stakeholders. The latest proposal suggests that the US government could acquire up to 50 percent ownership in this newly formed entity upon its initial public offering, which is projected to exceed $300 billion. This proposal was reportedly shaped based on feedback received from the Trump administration. According to an anonymous source familiar with the proposal, the government's stake in the company would not carry voting rights nor would they be granted a seat on the board of directors. ByteDance and TikTok have not yet issued a statement in response to the proposal.Under this plan, ByteDance would retain a presence in TikTok without severing all ties, a favorable outcome for its investors. However, the company would be required to relinquish 'full US board control,' the source stated. The proposal stipulates that ByteDance would contribute TikTok's US operations, excluding the proprietary algorithm that dictates the content users encounter on the platform. In return, ByteDance's existing investors would receive equity in the newly formed entity. The proposal echoes a strategy previously discussed by Steven Mnuchin, the Treasury Secretary during Trump's first term, on Fox News' Sunday Morning Futures. Mnuchin suggested that a new investor in TikTok could dilute the Chinese ownership, thereby satisfying the legal requirements. Mnuchin has also publicly expressed interest in investing in the company.Mnuchin emphasized the necessity of decoupling the technology from both China and ByteDance, stating that China would never concede access to such technology within its borders. The Perplexity proposal emerges amidst growing interest from various investors in acquiring TikTok. President Donald Trump indicated on Saturday that a deal could be finalized within 30 days. During a flight from Las Vegas to Miami aboard Air Force One, Trump stated that he had not engaged in discussions regarding a deal with Larry Ellison, CEO of software giant Oracle, despite reports suggesting Oracle, in collaboration with external investors, was exploring the possibility of taking over TikTok's global operations. Trump mentioned that numerous prominent individuals are expressing interest in purchasing TikTok, emphasizing that the United States would be a major beneficiary from such a transaction.Trump stipulated that he would only entertain a deal if it served the interests of the United States. A bipartisan law enacted last year mandated the ban of TikTok in the US by January 19th unless ByteDance severed its ties. The Supreme Court upheld this law, but Trump subsequently issued an executive order to suspend its enforcement for 75 days. Trump acknowledged that Ellison resides close to his Mar-a-Lago estate but asserted that they had not discussed TikTok. He further stated that he had engaged with numerous individuals regarding TikTok and that there is an intense level of interest in the platform.TikTok temporarily ceased operations in the US a week ago but resumed service after Trump announced a postponement of the ban. Trump had previously attempted to ban the platform during his first term but has since reversed his stance, attributing his increased support among younger voters during the 2020 presidential election to TikTok's influence. TikTok CEO Shou Chew attended Trump's inauguration on January 20th alongside other tech leaders who have cultivated closer relationships with the new administration. Congress enacted the TikTok ban due to concerns that its ownership structure posed a security risk. The Biden administration argued in court for an extended period that allowing a Chinese company to control the algorithm that determines user content on the platform presented an unacceptable risk. Officials also expressed apprehensions regarding user data collected on the platform. However, to date, the US government has not publicly presented any evidence of TikTok sharing user data with Chinese authorities or permitting them to manipulate its algorithm
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