OpenAI-rival Perplexity AI proposes merger with TikTok in the US
What's the story
Led by Aravind Srinivas, artificial intelligence (AI) search engine start-up Perplexity AI has pitched a merger with TikTok in the US.
The company's bid was submitted to TikTok's parent company ByteDance yesterday.
The proposed new entity would include Perplexity, TikTok US and new capital partners.
This would improve user experience on both platforms, and give Perplexity AI valuable insights in the growing AI-powered search sector.
Investor retention
Merger to retain ByteDance's existing investors
The proposed merger structure is aimed at letting most of ByteDance's existing investors retain their equity stakes. As per CNBC, a fair price for this transaction would be "north of $50 billion." However, the final figure will depend on which shareholders stay or cash out.
Market impact
Perplexity AI's valuation and potential impact on rivals
Perplexity AI, a competitor to OpenAI and Google, started 2024 with a valuation of around $500 million.
By the year's end, it had skyrocketed to nearly $9 billion amid heightened investor interest in the generative AI boom.
Investors see AI-assisted search as a possible threat to Google's supremacy in accessing information online.
The notion was further solidified when OpenAI launched SearchGPT, an AI-powered search engine.
Political influence
TikTok's future in the US
In related news, TikTok has paused services in the US as the Joe Biden administration offered no assurance that it won't penalize service providers for hosting it.
However, President-elect Donald Trump told NBC News that he "most likely" would offer TikTok 90 more days to work out an agreement after he is sworn into office tomorrow.
Responding to this, TikTok CEO Shou Zi Chew thanked Trump for his commitment to finding an answer that keeps TikTok available in the US.