Perplexity AI's Bold Bid: A New Era with TikTok?

Perplexity AI proposes a merger with TikTok U.S., seeking to create a new entity alongside New Capital Partners. With a U.S. ban looming for TikTok, this move may preserve existing ByteDance investors' stakes. TikTok must sever ties with ByteDance, but a 90-day reprieve is likely forthcoming.

Perplexity AI has approached TikTok's Chinese parent company, ByteDance, with a proposal to merge TikTok U.S. and Perplexity into a new entity, CNBC has reported. This proposed merger also involves New Capital Partners, and aims to navigate potential U.S. legal challenges facing TikTok.

The move comes as TikTok faces the threat of a U.S. ban if it doesn't separate from ByteDance. However, President-elect Donald Trump indicated he might extend a 90-day reprieve for the popular short-video app. The merger allows most existing ByteDance investors to keep their stakes while boosting Perplexity's video offerings.

As Perplexity AI and TikTok remain silent on the proposal, and New Capital Partners unreachable, the plan hinges on the distinction between a merger and a sale. Perplexity's advanced search tools, powered by large language models including OpenAI's technology, made the merger appealing by offering quick, cited information.

(With inputs from agencies.)