On January 19, 2025, according to CNBC, a financial and economic media outlet in the United States, Perplexity AI, a technology startup company, has submitted a bid to the Chinese parent company of TikTok, ByteDance, with the intention to merge with ByteDance’s US business and create a new entity.
Perplexity AI’s proposed structure, as revealed by a source familiar with the matter to CNBC, would allow most of ByteDance’s current investors to retain their shares instead of directly selling TikTok.
The source added that ByteDance’s public stance against selling TikTok’s US operations played a significant role in Perplexity AI’s bid success, as the proposal centered around a merger rather than an outright sale. If the merger goes through, it will provide Perplexity with access to more video content. Due to the confidentiality of the potential transaction, the source requested to remain anonymous.
The expected merger price, as disclosed by the source, is “far above $50 billion,” but the specific figure will depend on how many of ByteDance’s current shareholders opt to retain their shares and how many wish to cash out.
Founded as an artificial intelligence search engine startup, Perplexity AI was valued around $500 million at the beginning of 2024 and approximately $9 billion by the end of that year.
On Friday, the US Supreme Court unanimously upheld the ban on TikTok, allowing for the enforcement of legislation passed by Congress. As per the law, ByteDance is required to divest TikTok by January 19, or the app will face prohibition in the US.
Outgoing President Joe Biden stated that he would not enforce the ban in the final days of his term, and the decision regarding the application would be left to his successor, President-elect Trump.
In an NBC phone interview on Saturday, Trump expressed that he is “likely” to give TikTok more time and could potentially announce this on Monday, the day of his second-term inauguration.
Bloomberg analysis points out that the sale of TikTok presents some challenges, with ByteDance expressing a reluctance to sell its US operations and the market valuation presenting difficulties in finding a buyer – as few companies or individuals could readily come up with at least $50 billion to acquire TikTok.
One potential scenario involves billionaires as potential buyers, such as Elon Musk or investor teams like Frank McCourt and Kevin O’Lear, both of whom have publicly expressed interest in acquiring the app.
TikTok released a statement on the evening of the 17th, indicating that they might shut down operations on the 19th unless the Biden administration provides a clear non-prosecution declaration to US internet service providers.
Under legal regulations, Apple’s App Store and Google’s Google Play Store are mandated to remove TikTok by then. Likewise, internet hosting service providers like Oracle must cease supporting TikTok from the same day.
Failure to comply with these requirements could lead to fines of $5,000 per user by the US Department of Justice, with around 170 million active users in the US, potentially resulting in fines up to $850 billion and ensuring strict adherence by all relevant companies to the law.
It is important to note that US law does not mandate a complete shutdown of TikTok; it only restricts new downloads from Apple and Google application stores, allowing existing users to continue using the app without updates.
US officials have warned that TikTok’s management may be influenced by the Chinese government, which could compel the company to share US user data and disseminate Chinese propaganda.
Previously, the White House expressed concerns about national security and aimed to see ByteDance relinquish ownership of TikTok while not entirely banning the app.