Perplexity AI, the star in the AI search engine industry, took a big leap on Saturday by filing a proposal to ByteDance for a merger with TikTok US. This proposed merger would see Perplexity, TikTok U.S., and New Capital Partners merged into a new entity, according to a source close to the deal. This move is intended to ensure equity stakes for most of ByteDance’s existing investors while bringing enhanced video capabilities to Perplexity AI.
The timing of a bid is imperative because TikTok faces significant uncertainty in the US. On Sunday, the application will “go dark” should the Biden Administration fail to vow that hosting apps such as Apple and Google don’t face litigation for allowing it to operate. Instead, President-Elect Donald Trump, who assumes office today, said over the weekend he would probably permit TikTok to use a 90-day extension that allows it more time to arrange a deal.
Perplexity AI is making waves over the years, now plans to merge with TikTok US
Perplexity AI has gained meteoric proportions over the past year, going from a $500 million valuation at the beginning of 2024 to a projected $9 billion by year-end. The boost has been led by increasing interest from investors in generative AI, despite controversies over plagiarism claims. Being the search platform that challenges giants like OpenAI and Google, Perplexity has been touted as a disruption in the search industry, an area investors view as one of Google’s greatest vulnerabilities.
TikTok CEO Shou Zi Chew sounded hopeful in a TikTok video on Friday, thanking President Trump for his willingness to collaborate on a solution to keep TikTok operational in the U.S. While ByteDance has publicly resisted the idea of selling TikTok U.S., Perplexity’s proposal as a merger, rather than a sale, appears to be a strategic workaround.
According to the source, the deal could be valued above $50 billion. The figure, however, depends on the ByteDance investors who opt to cash out of the new entity or stay put.
Also, see: US’s ban on TikTok means a $1.3 billion loss to small businesses in one month