Perplexity's revised TikTok merger plan includes 50% US government ownership
What's the story
Perplexity AI has revised its merger proposal with ByteDance, TikTok's parent company.
The revised plan outlines the creation of a new US holding company, "NewCo." Under this proposal, ByteDance would divest TikTok US to investors while retaining ownership of its core recommendation algorithm, a crucial factor in TikTok's global success.
Notably, the proposal suggests that the US government could acquire up to a 50% stake in NewCo after an initial public offering (IPO) with a minimum valuation of $300 billion.
Legal hurdles
TikTok's US operations face regulatory challenges
TikTok's US operations have been under regulatory scrutiny. The app went offline in the US for some 14 hours last week, after a federal law mandated it to cut ties with its Chinese parent company or be shut down.
President Donald Trump issued an executive order giving the app another 75 days to comply with the law. However, the legality of the order remains unclear as of now.
Rescue plan
Potential deal to save TikTok
Reportedly, the Trump administration is mulling a plan to save TikTok by bringing Oracle and a group of outside investors, including Microsoft, on board.
As part of the deal, ByteDance would keep a minority stake in the company while Oracle would take charge of the app's algorithm, data collection, and software updates.
White House officials and Oracle executives have already held meetings to discuss the deal.
Proposal details
Perplexity AI's proposal and its implications
Perplexity AI's updated proposal was submitted last week, as an update to a previous plan submitted to ByteDance on January 18.
If successful, the government's stake in the new entity would not carry voting powers or board representation.
This plan would allow ByteDance to maintain ties with TikTok while ensuring "full US board control," potentially benefiting its investors.