Perplexity AI has put forward a new proposal to TikTok’s parent company, ByteDance, suggesting that the U.S. government could own up to 50% of a new entity that would combine Perplexity with TikTok’s U.S. operations. This revised plan was submitted last week and comes after an earlier proposal from Perplexity to ByteDance, which was made on January 18, the day before a law banning TikTok took effect in the U.S.
In the first proposal, which ByteDance has not yet responded to, Perplexity suggested forming a new company that would merge its operations with TikTok’s U.S. business, with additional investments from other parties.
The updated proposal includes a provision that, following an initial public offering (IPO) worth at least $300 billion, the U.S. government could own a 50% stake in the combined company. This revision was made in response to feedback from the Trump administration.
If the plan goes through, the shares owned by the U.S. government would not have voting rights, according to the source. Additionally, the government would not have a seat on the new company’s board.
ByteDance and TikTok have not yet responded to requests for comment.
The proposed plan would allow ByteDance to maintain its connection with TikTok, which would be beneficial for its investors, but it would have to give up full control of the U.S. operations, leaving the U.S. board in charge.
According to a document reviewed by the Associated Press, ByteDance would contribute TikTok’s U.S. business but without the proprietary algorithm that determines the content users see on the app. In return, ByteDance’s current investors would receive equity in the newly formed entity.
The proposal appears to align with a strategy suggested by Steven Mnuchin, who was Treasury Secretary during Trump’s first term. On Fox News, Mnuchin discussed the idea of a new investor entering TikTok, which could “dilute” Chinese ownership enough to meet legal requirements. Mnuchin has previously shown interest in investing in the company.
Steven Mnuchin emphasized that the technology behind TikTok needs to be completely separated from China, explaining that there’s no way China would allow something like this to operate within its borders.
Perplexity’s proposal comes at a time when multiple investors are showing interest in TikTok. President Donald Trump stated on Saturday that he expects a deal to be reached within 30 days.
While flying from Las Vegas to Miami aboard Air Force One, Trump mentioned that he had not discussed a deal with Larry Ellison, the CEO of Oracle, despite reports suggesting Oracle, along with other investors, might take control of TikTok’s global operations.
Trump said, “Numerous people are talking to me. Very substantial people,” and expressed that there’s a lot of interest in the deal, adding, “The United States will be a big beneficiary. I’d only do it if the United States benefits.”
A bipartisan law passed last year mandated TikTok’s ban in the U.S. by January 19 unless it severed ties with ByteDance. Although the Supreme Court upheld the law, Trump issued an executive order pausing enforcement for 75 days.
On Air Force One, Trump mentioned that Larry Ellison lives “right down the road” from his Mar-a-Lago estate but clarified, “I never spoke to Larry about TikTok.” He added that he’s spoken with many people about TikTok, noting there is significant interest in the platform.
TikTok was briefly shut down in the U.S. last week but was brought back online after Trump announced a delay in the ban. During his first term, Trump had attempted to ban the platform but later changed his stance, even crediting TikTok with helping him gain support from younger voters in the previous presidential election.
TikTok’s CEO, Shou Chew, attended Trump’s inauguration on January 20, alongside other tech leaders who have been working on building better relationships with the current administration.
Congress voted to ban TikTok in the U.S. over concerns that its ownership structure posed a national security threat. The Biden administration spent months arguing in court that allowing a Chinese company to control TikTok’s algorithm was too risky, citing concerns about user data as well.
However, the U.S. government has yet to present any public evidence showing that TikTok has shared user data with Chinese authorities or allowed them to manipulate its algorithm.