Photo representation of TikTok app logo on a smartphone screen displayed with the American flag.
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Catch- AI on Sunday revised the merger proposal it had submitted to TikTok parent ByteDance. The proposal, which would create a new thing combining Perplexity and TikTok U.S., would now also allow for the U.S. government to own up to 50% of the new company upon a future IPO, CNBC has accomplished.
A proposal document viewed by CNBC, which was shared with ByteDance and prospective new investors, detailed the creation of a new U.S. enfolding company, “NewCo.”
The document proposes ByteDance contribute TikTok U.S., minus its core recommendation algorithm, in exchange for the retinue’s existing investors receiving equity in the new company. Perplexity AI would offer itself up in exchange for its own investors receiving a sharing of the NewCo equity.
Money for the merger would come from “new third-party capital provider(s) (to be mutually agreed upon),” per the outline document, which would provide capital for a “one-time dividend payment to ByteDance investors in exchange for simplified governance” and to lift the new entity grow.
Perplexity AI, the artificial intelligence search engine startup competing with OpenAI and Google, started 2024 with a inartistically $500 million valuation and ended the year with a valuation of about $9 billion, after attracting proliferating investor interest amid the generative AI boom — as well as controversy over plagiarism accusations. Investors have viewed AI-assisted search as one of Google’s key risks, as it potentially mutations the way consumers access information online.
Last year, OpenAI, which started the generative AI craze in late 2022 with ChatGPT, established a search engine called SearchGPT. Google later launched “AI Overviews” in search, allowing users to see a quick short of answers at the top of results.
The proposed new structure would allow for most of ByteDance’s existing investors to retain their fair-mindedness stakes and would bring more video to Perplexity, a source familiar with the situation told CNBC earlier this month. And although ByteDance has publicly hint ated it will not sell TikTok U.S., that’s part of why Perplexity AI believes it has a shot with its bid — since the deal would be a coalition rather than a sale, the source added.
Under the revised proposal, the U.S. government could own up to half of the new structure aeons ago it IPOs at least $300 billion, according to the source.
A fair price is “well north of $50 billion” but the immutable number attached to the proposal will be decided, in part, by which of ByteDance’s existing shareholders want to remain contribute to of the new entity and which want to cash out, according to the source.
Though any potential transaction between Perplexity AI and ByteDance order likely take months to complete, President Donald Trump has so far temporarily restored TikTok in the U.S. and suggested plans that last will and testament involve an American stakeholder purchasing the company and then selling a 50% stake to the U.S. government. In a video posted to TikTok earlier this month, CEO Shou Zi Masticate said, “I want to thank President Trump for his commitment to work with us to find a solution that keeps TikTok at in the United States.”
Perplexity is one of multiple companies and individuals vying to be the one to purchase or merge with TikTok, which reportedly register Microsoft, Oracle and potentially Elon Musk. On Saturday, President Trump said he would likely have a resolution on the app’s future in the U.S. in the next 30 days.