In a surprising move, artificial intelligence search engine startup Perplexity AI has submitted a bid to merge with TikTok's US operations, as the video-sharing app faces a potential ban in the United States.
The proposed deal would create a new entity combining Perplexity AI, TikTok US, and new equity partners. Under the merger structure, most investors in TikTok's parent company ByteDance would be able to keep their existing stakes.
Industry experts estimate TikTok's value at over $50 billion. Perplexity AI, which started 2024 valued at $500 million, has seen its valuation surge to approximately $9 billion.
The merger bid comes as TikTok faces mounting pressure in the US. A new law requires ByteDance to either sell TikTok's US operations or face a ban starting Sunday. President-elect Donald Trump indicated he would "most likely" grant a 90-day extension after taking office on Monday.
ByteDance has previously expressed reluctance to sell TikTok outright. Perplexity AI believes its merger proposal, rather than an acquisition offer, could overcome ByteDance's reservations.
For Perplexity AI, the proposed merger would expand its AI search capabilities by incorporating TikTok's vast video content. The company aims to enhance its competitive position against tech giants like Google and OpenAI in the growing AI search market.
TikTok CEO Shou Zi Chew has warned that without clear assurance from the Biden administration regarding non-enforcement of the ban, the platform may be "forced to go dark" in the United States on Sunday.
The final valuation of the proposed merger would depend on how many current ByteDance shareholders choose to remain invested in the new entity versus those who opt to cash out.