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Perplexity AI officially made a move for TikTok on Saturday, submitting an offer to its parent company ByteDance to form a new merged entity consisting of Perplexity, TikTok US and New Capital Partners, CNBC has learned.
The new structure would allow most of ByteDance's existing investors to retain their equity stakes and bring more videos to Perplexity, according to a source familiar with the situation, who asked to remain anonymous due to the confidential nature of the potential deal.
Perplexity AI, the artificial intelligence search engine startup that competes with OpenAI and Googlestarted 2024 at a valuation of about $500 million and ended the year at a valuation of about $9 billion, after attracting increasing investor interest amid the generative AI boom — and controversy over plagiarism allegations.
AI-powered search is seen by investors as one of Google's key risks as it potentially changes the way consumers access information online. Last year, OpenAI, which kicked off the generative AI hype with ChatGPT in late 2022, introduced a search engine called SearchGPT. Google later introduced “AI summaries” in search, allowing users to see a quick summary of answers at the top of results.
However, any potential transaction between Perplexity AI and ByteDance would likely take months – and TikTok has said the app will be “hidden” in the US on Sunday unless the Biden administration assures it will not be punished AppleGoogle and other hosting service providers – President-elect Donald Trump told NBC News on Saturday that he would “most likely” give TikTok 90 more days to work out a deal after he takes office 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 that keeps TikTok available in the United States.”
ByteDance has publicly indicated it won't sell TikTok US, which is why Perplexity AI believes it has a chance with its offer – since the offer is more of a merger than a sale, the source told CNBC.
The source believes a fair price is “well above $50 billion,” but that the final figure attached to the proposal will depend in part on which of ByteDance's existing shareholders remain part of the new company and which want to pay out.
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