US Could Own 50% Stake Under Perplexity AI's Revised TikTok Proposal

Perplexity AI has submitted a revised proposal to TikTok's parent company, ByteDance, under which the U.S. government could acquire up to a 50% stake in a new entity that merges TikTok's U.S. operations with Perplexity.

The proposal, presented last week, was a revised from the one that was submitted on Jan.18, just before the U.S. law banning TikTok took effect, reported the Associated Press.

Perplexity's earlier proposal included an overhaul of policies to draw investment from outside investors alongside merging the San Francisco-based Perplexity with TikTok's U.S. wing. However, ByteDance hasn't responded to the first proposal.

The new proposal would let the U.S. government own up to half of that new structure following an IPO that raises at least $300 billion, Reuters reported, citing an anonymous source. The person said Perplexity decided to revise its proposal based on feedback from the Trump administration.

But, under the new proposal, the U.S. government would not have any voting power or a seat on the board. ByteDance would have to let go of a share of TikTok's control or the U.S. board to take charge, however, it will continue to contribute to TikTok's U.S. business, excluding its proprietary algorithm, in exchange for equity in the new entity for its existing investors.

The U.S. government had set a deadline for TikTok until Jan. 19 to sell its U.S. operations to a new Chinese company or face a complete ban. As its last-ditch effort to dodge the ban, the CEO of ByteDance met Donald Trump seeking the Supreme Court's intervention and actions to block the ban temporarily. The Supreme Court upheld the law.

Amid the chaos, TikTok went dark for a short period nationwide and was later restored after Trump issued an executive order to halt enforcement of the law for 75 days.

Many bigshot investors such as Elon Musk, CEO of Tesla and SpaceX, Larry Ellison, co-founder of Oracle, and General Atlantic CEO Bill Ford, who sits on the board of directors for ByteDance, came forward to buy TikTok's U.S. operations to save it from the imminent ban.

Donald Trump, in a pre-inauguration rally, had told his supporters that he looks forward to seeing the U.S. government holding a 50% stake in TikTok's operations to save jobs.

Concerns about TikTok's ownership structure led the congressional body to vote in favor of a ban on the app in the U.S. Lawmakers believed that TikTok's ties with China posed a security risk, particularly since a Chinese company controlled the algorithm that determined what users saw on the app.