Perplexity AI’s revised proposal for merging with ByteDance, the parent company of TikTok, has introduced some significant changes that have the potential to reshape the future of the popular video-sharing platform in the United States. In its latest proposal, Perplexity AI envisions a deal where the U.S. government could ultimately end up owning 50% of a newly formed entity, NewCo, after the merger and once the company goes public. This shift is aimed at addressing the deep-rooted national security concerns that have loomed over TikTok for years, mainly due to its Chinese ownership.
Under the updated plan, ByteDance would retain a stake in TikTok U.S. but would not be required to fully sell the platform. Instead, Perplexity AI would leverage TikTok’s powerful social media presence, massive user base, and robust content creation tools to enhance its own technological portfolio. The merger would allow Perplexity AI to access a new market and further bolster its ambitions in the tech world. The unique aspect of this deal is that it proposes a level of U.S. government involvement, which would reassure American regulators and lawmakers concerned about TikTok’s ties to China. The idea of the U.S. government potentially holding a significant ownership share after the company goes public could play a critical role in alleviating national security fears, which have been a persistent obstacle for TikTok in the U.S.
ByteDance has long maintained that it does not want to sell TikTok U.S., as the platform has become a major asset in its portfolio. However, Perplexity’s approach differs from other proposals by framing the deal as a merger, rather than a forced sale. This framing could make the deal more appealing to ByteDance, as it allows the company to retain a stake in TikTok’s operations in the U.S. without fully divesting its interests. ByteDance has repeatedly stated that it is unwilling to relinquish control over TikTok, given the importance of the platform in its global business strategy. The new proposal from Perplexity AI would allow ByteDance to preserve its involvement in the U.S. market while addressing the concerns of U.S. regulators.
The political context surrounding TikTok has been heavily influenced by the Trump administration’s stance on the company. Under President Donald Trump, the U.S. government repeatedly raised national security concerns regarding TikTok’s Chinese ownership and its potential access to American users’ data. The administration even floated the possibility of banning TikTok in the U.S., but TikTok has managed to avoid such an outcome so far, thanks to ongoing legal challenges and temporary stays of execution. Despite this, the threat of a ban still looms large, particularly as U.S. officials continue to scrutinize TikTok’s data-sharing practices and ties to China.
In addition to Perplexity AI, several other major tech players have expressed interest in TikTok’s future in the U.S. Companies like Microsoft, Oracle, and even billionaire Elon Musk have been linked to potential deals involving the social media platform. While these players have all expressed interest in acquiring TikTok, their proposals vary widely in terms of structure and the level of U.S. government involvement. Microsoft and Oracle, for instance, have suggested a more traditional acquisition model, while Musk has hinted at a broader strategic partnership. With so many competing proposals on the table, the coming weeks could prove to be crucial in determining TikTok’s future in the U.S. market.
A final decision on TikTok’s fate in the U.S. is expected soon, but much remains uncertain. The situation continues to evolve, with regulators, lawmakers, and corporate executives closely watching the developments. If the U.S. government does indeed acquire a significant stake in the merged entity, it could set a precedent for the involvement of the government in the ownership structures of foreign-owned tech companies operating in the U.S. Additionally, the outcome of this merger could have broader implications for the future of global tech regulation, as governments around the world grapple with how to balance national security concerns with the rapidly expanding reach of global tech companies. Ultimately, the next few weeks will likely shape not only the future of TikTok but also the broader landscape of global technology mergers and acquisitions.
