Perplexity AI makes a bid to merge with TikTok US as Trump set for announcement
Perplexity AI has submitted a bid to merge with TikTok’s US operations, CNBC has learned, in a move that would create a new entity combining the AI company with TikTok US and New Capital Partners.
The proposal comes as TikTok faces mounting pressure in the United States, with the app warning it could go dark this Sunday.
The merger bid represents an alternative to an outright sale, which TikTok’s parent company ByteDance has been reluctant to pursue.
The proposed structure would allow most of ByteDance’s existing investors to maintain their equity stakes in the new entity, according to a source familiar with the matter.
The source indicated that a “fair price” for the deal would be “well north of $50 billion”, with the final valuation dependent on which ByteDance shareholders choose to remain invested.
The merger would also expand Perplexity’s offerings, bringing more video content to the AI company’s platform.
President-elect Donald Trump told NBC News on Saturday that he would “most likely” grant TikTok a 90-day extension to secure a deal after his inauguration on Monday.
“The 90-day extension is something that will be most likely done, because it’s appropriate,” Trump told NBC in an interview. “If I decide to do that, I’ll probably announce it on Monday.”
The development comes as TikTok warned it would “go dark” in the United States on Sunday unless the Biden administration provides assurances it won’t penalise Apple, Google and other service providers for hosting the app.
The timeline suggests a critical window for negotiations as leadership changes hands in Washington.
TikTok CEO Shou Zi Chew expressed gratitude in a video posted Friday, stating: “I want to thank President Trump for his commitment to work with us to find a solution that keeps TikTok available in the United States.”
ByteDance has publicly indicated it would not sell TikTok US operations, which the source says gives Perplexity AI’s bid potential merit.
The merger proposal, rather than an outright sale, aligns with ByteDance’s stated position on the matter.
Perplexity AI has seen remarkable growth, with its valuation surging from approximately £500million to £9billion throughout 2024, driven by increasing investor interest in generative AI.
The company operates in the competitive AI-assisted search market, which investors view as a potential challenge to Google’s dominance in online information access.
The sector has seen significant developments, with OpenAI launching SearchGPT and Google introducing “AI Overviews” to provide quick answer summaries atop search results.