New Proposal for TikTok Sparks Government Involvement

• Perplexity AI proposes a merger with TikTok’s US business, offering the US government a 50% stake.
• The government’s shares would be non-voting and would not have board representation.
• ByteDance would retain a role without the proprietary algorithm in the new structure.

Washington: Perplexity AI, an artificial intelligence search engine startup, has put forth a fresh proposal to TikTok’s parent company, ByteDance. This new plan could give the US government a significant 50% ownership stake in a newly merged entity comprising Perplexity and TikTok’s US business, as confirmed by an insider familiar with the negotiations.

This proposal, submitted last week, is an update to an earlier plan submitted to ByteDance on January 18, just ahead of the TikTok ban law taking effect. The original idea, which ByteDance has yet to respond to, suggested a merger of Perplexity with TikTok’s US operations, with participation from additional investors.

The revised proposal introduces a unique twist: upon the new entity’s initial public offering, expected to value the company at no less than $300 billion, the US government could own up to half of the business. However, the government’s shares would be non-voting, and it would not hold a seat on the company’s board.

ByteDance’s involvement would remain, but with a notable condition—“full US board control” would be necessary, granting the US side significant authority over decisions. ByteDance would also contribute its US business operations but exclude the proprietary algorithm that drives TikTok’s content recommendations, according to an internal document obtained by the Associated Press.

This revised proposal comes amid heightened interest from various investors, including a statement from former President Donald Trump, who suggested that a deal could be struck in the next 30 days. Trump also noted that, despite reports, he had not discussed TikTok with Larry Ellison, the CEO of Oracle, who has been rumored to be considering a potential deal to manage TikTok’s global operations.

TikTok CEO Shou Chew, who was seen at Trump’s inauguration, continues to strengthen ties with the US administration, signaling a more favorable environment for negotiations moving forward.