Perplexity AI makes merger offer with TikTok US

Perplexity AI officially made a play for TikTok on Saturday, submitting an offer to its parent company, ByteDance, to allow Perplexity to merge with TikTok US and create a new entity combining Perplexity, TikTok US and New Capital Partners, CNBC has learned.

The new structure would allow most of ByteDance’s existing investors to retain their stakes and bring more videos to Perplexity, according to a source familiar with the matter, who asked to remain anonymous due to the confidential nature of the potential deal.

Perplexity AI, the artificial intelligence search engine startup competing with OpenAI and Googlestarted 2024 with a valuation of around $500 million and ended the year with a valuation of around $9 billion, after attracting growing investor interest amid a boom in generative AI – as well than controversy over accusations of plagiarism.

AI-powered search is seen by investors as one of Google’s biggest risks because it could change the way consumers access information online. Last year, OpenAI, which kicked off the generative AI craze in late 2022 with ChatGPT, introduced a search engine called SearchGPT. Google then launched “AI Overviews” in search, allowing users to see a quick summary of answers at the top of the results.

However, any potential transaction between Perplexity AI and ByteDance would likely take months – and TikTok said the app would “go dark” in the US on Sunday unless the Biden administration ensures it will not punish. AppleGoogle and other service providers to host it — President-elect Donald Trump told NBC News on Saturday that he would “most likely” give TikTok another 90 days to reach a deal after he is sworn in on Monday.

In a video posted to TikTok on Friday, CEO Shou Zi Chew said: “I want to thank President Trump for his commitment to working with us to find a solution to keep TikTok available in the United States. »

ByteDance has publicly hinted that it won’t sell TikTok US, which is part of why Perplexity AI thinks it has a chance with its offer — since the proposal is a merger rather than a sale, the source told CNBC.

The source estimates that a fair price is “well above $50 billion,” but that the final amount attached to the proposal will be determined, in part, by which of ByteDance’s existing shareholders wish to remain in the new entity and who wishes to collect. .