Under the plan, TikTok’s parent company, ByteDance, would not have to completely cut ties with TikTok, a favorable outcome for its investors.
Perplexity AI has put forward a new idea to the parent company of TikTok, suggesting that the U.S. government could potentially own up to 50% of a combined entity involving Perplexity and TikTok’s U.S. operations. This suggestion was shared by a source knowledgeable about the situation.
The recent proposal, presented last week, is an updated version of a previous plan that the artificial intelligence startup had offered to ByteDance, TikTok’s parent company, on January 18, just a day before the TikTok ban law took effect.
The original proposal, to which ByteDance has not yet responded, aimed to establish a fresh framework merging Perplexity, based in San Francisco, with TikTok’s U.S. business and incorporating investments from other interested parties.
The new proposal would allow the U.S. government to own up to half of that new structure once it makes an initial public offering of at least $300 billion, said the person, who was not authorized to speak about the proposal. The person said Perplexity’s proposal was revised based off of feedback from the Trump administration.
If the plan is successful, the shares owned by the government would not have voting power, the person said. The government also would not get a seat on the new company’s board.
ByteDance and TikTok did not immediately responded to a request for comment.
Under the plan, ByteDance would not have to completely cut ties with TikTok, a favorable outcome for its investors. But it would have to allow a “full U.S. board control,” the person said.
Under the proposal, the China-based tech company would contribute TikTok’s U.S. business without the proprietary algorithm that fuels what users see on the app, according to a document seen by the Associated Press.
The proposal seems to mirror a strategy Steven Mnuchin, treasury secretary during Trump’s first term, discussed Sunday on Fox News’ Sunday Morning Futures — that a new investor in TikTok could simply “dilute down” the Chinese ownership and satisfy the law. Mnuchin has previously expressed interest in investing in the company.
“But the technology needs to be disconnected from China,” he added. “It needs to be disconnected from ByteDance. There’s absolutely no way that China would ever let us have something like that in China.”
The Perplexity proposal comes as several investors are expressing interest in TikTok. President Donald Trump said late Saturday that he expects a deal will be made in as soon as 30 days.
On a flight from Las Vegas to Miami on Air Force One, Trump also said he hadn’t discussed a deal with Larry Ellison, CEO of software maker Oracle, despite a report that Oracle, along with outside investors, was considering taking over TikTok’s global operation.
“Numerous people are talking to me. Very substantial people,” Trump said. “We have a lot of interest in it, and the United States will be a big beneficiary. … I’d only do it if the United States benefits.”
Under a bipartisan law passed last year, TikTok was to be banned in the United States by Jan. 19 if it did not cut ties with ByteDance. The Supreme Court upheld the law, but Trump then issued an executive order to halt enforcement of the law for 75 days.
Trump, on Air Force One, noted that Ellison lives “right down the road” from his Mar-a-Lago estate, but added, “I never spoke to Larry about TikTok. I’ve spoken to many people about TikTok and there’s great interest in TikTok.”
TikTok briefly shut down in the U.S. a week ago, but went back online after Trump said he would postpone the ban. Trump had unsuccessfully attempted a U.S. ban of the platform during his first term. But he has since reversed his position and has credited the platform with helping him win more young voters during last year’s presidential election.
TikTok CEO Shou Chew attended Trump’s inauguration Jan. 20, along with some other tech leaders who’ve been forging friendlier ties with the new administration.
Congress voted to ban TikTok in the U.S. out of concern that TikTok’s ownership structure represented a security risk. The Biden administration argued in court for months that it was too much of a risk to allow a Chinese company to control the algorithm that fuels what people see on the app. Officials also raised concerns about user data collected on the platform.
However, to date, the U.S. hasn’t provided public evidence of TikTok handing user data to Chinese authorities or allowing them to tinker with its algorithm.
Hadero reported from South Bend, Indiana.
