Photo illustration of TikTok application logo showing American flag on smartphone screen.
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Perplexity AI on Sunday revised its merger proposal to TikTok parent ByteDance. According to CNBC, the proposal would create a new entity that would merge Perplexity and TikTok US and now also allow the U.S. government to own up to 50% of the new company in a future IPO.
A proposal document shared with ByteDance and potential new investors and seen by CNBC details the creation of a new U.S. holding company, “NewCo.”
The filing proposes that ByteDance would contribute to TikTok US, minus its core recommendation algorithm, in exchange for existing investors in the company receiving equity in the new company. Perplexity AI will make its own demands in exchange for its investors receiving allocations of NewCo equity.
According to the proposal document, funding for the merger will come from “a new third-party capital provider (to be agreed upon by the parties)” which will “pay a one-time dividend to ByteDance investors in exchange for simplified governance” and help the new entity grow .
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A person familiar with the matter told CNBC earlier this month that the proposed new structure would allow most of ByteDance’s existing investors to retain their stakes and would bring more films to Perplexity. Although ByteBounce has publicly hinted at it won’t sell That’s part of the reason Perplexity AI thinks it has a chance to bid for TikTok US, as the deal would be a merger rather than a sale, the sources added.
Under the revised proposal, the U.S. government could own up to half of the new structure’s IPO once it reaches at least $300 billion, sources said.
According to ByteDance, a reasonable price is “well above $50 billion,” but the final figure attached to the proposal will depend in part on which of ByteDance’s existing shareholders want to remain in the new entity and which ones Cash out.
While any potential deal between Perplexity AI and ByteDance could take months to close, President Donald Trump So far, TikTok has temporarily resumed operations in the United States and has proposed a plan for U.S. stakeholders to acquire the company and then sell 50% of the shares to the U.S. government. In a video posted to TikTok earlier this month, CEO Shou Zi Chew said: “I want to thank President Trump for his commitment to working with us to find solutions that will keep TikTok available in the United States.”
Perplexity is one of several companies and individuals vying to acquire or merge with TikTok, reportedly including Microsoft, Oracle and possible Musk. On Saturday, President Trump said he may make a decision on the app’s future in the United States within the next 30 days.
