Revising an initial TikTok merger proposal it issued on January 18, San Francisco’s Perplexity AI now wants to create a new corporate entity that could be as much as 50%-owned by the US government. 

Under this plan, TikTok parentco ByteDance and Perplexity would create a US holding company called NewCo that would take over operations of TikTok US (without its core recommendations algorithm). Then in an initial public offering, the US government would be able to buy up to 50% of NewCo’s shares. 

The financing for this merger would come from new third-party capital providers that must be mutually approved by both companies. Capital raised in the IPO would be used to make a one-time divided payment to ByteDance investors, as well as to help the company grow. Most existing ByteDance investors could opt to retain their equity stakes, and the merger would bring more value to Perplexity, says a source close to the deal. 

But Perplexity is not likely to be alone in the bidding race for long. Other companies reportedly looking into buying TikTok US include Microsoft and Oracle, and Elon Musk, Jimmy Donaldson (a.k.a. MrBeast) and Shark Tank‘s Kevin O’Leary have also expressed interest.  

Operating an AI-powered search engine, Perplexity launched in August 2022, and its valuation increased from US$500 million to US$9 billion last year, thanks to the ongoing generative AI boom driving more investor interest. 

A US TikTok ban still looms, but US President Donald Trump said on Saturday that he expects a deal to close within 30 days that would see the platform’s US operations sold to an American buyer, thereby diffusing the situation. US congress passed a law to ban TikTok stateside in April 2024 due to concerns about the private data of American citizens falling into the hands of the Chinese government, and Trump’s January 20th executive order to keep the platform up and running is only good for 75 days.