Perplexity AI's new proposal for TikTok could give 50% stake to US government

1. Perplexity AI's new proposal for TikTok could give 50% stake to US government

Perplexity AI's new proposal for TikTok could give 50% stake to US government ByHT News Desk Jan 27, 2025 03:43 AM IST Share Via Copy Link Though a proposal was submitted last week, a new plan was presented after revisions based on Trump administration's feedback.

Perplexity AI has come up with a new proposal to TikTok's parent company, China-based ByteDance, that would allow the US government to own up to 50 per cent stake in the new entity that the merged business would create, The Associated Press reported.

After taking the office, Donald Trump signed an executive order halting the ban on TikTok for 75 days. (Reuters)

The proposal, which was submitted last week, is a revised version of a previous plan the artificial intelligence startup had presented to the Chinese company on January 18, a day before the federal ban was imposed on TikTok.

ByteDance hadn't responded to the first proposal, which sought to create a new structure to merge the San Francisco-based Perplexity with TikTok's US business and include investments from other investors.

But the new proposal would let the Trump administration own up to half of the new structure once it makes an initial public offering of at least $300 billion, a person familiar with the matter was cited by AP.

Perplexity AI's proposal was revised on the basis of the feedback received from the newly inaugurated Trump administration.

At present, TikTok is available to users in America due to the 75-day extension authorised by US President Donald Trump.

If the new plan goes through successfully, then the stake that the government would own will not have voting powers and neither will get a seat on the board, the person added.

Additionally, ByteDance will not have to completely cut ties with TikTok, resulting in a favourable plan for its investors. However, it will have to allow a "full US board control", the person added.

With the new proposal, the Chinese tech company would contribute to TikTok's American business without the proprietary algorithm that enables the function of what content users see on the app, the AP reported.

The proposal seemingly mirrors a strategy that former treasury secretary from Trump's first term, Steven Mnuchin, described recently. The strategy is such that a new investor in the content sharing company would basically "dilute down" the Chinese ownership and satisfy the law. Mnuchin has also previously expressed interest in investing in TikTok.

“But the technology needs to be disconnected from China. It needs to be disconnected from ByteDance. There’s absolutely no way that China would ever let us have something like that in China.”

Other than Perplexity, several other companies have also been expressing interest in investing in TikTok, with President Trump saying that a deal is likely to be made on the app in as soon as 30 days.

During his Air Force One flight from Las Vegas to Miami, Trump said that he hadn't discussed a deal with Oracle CEO Larry Ellison, despite reports suggesting that the software maker company was considering a taking over TikTok's global operation.

Trump said, "Numerous people are talking to me. Very substantial people. 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.”

TikTok was facing a threat of being banned under a bipartisan law that required the social media platform to cut ties with China-based ByteDance. Though the US Supreme Court had upheld the law, Trump issued an executive order halting the enforcement of the law.

On Air Force One, Trump also said that the Oracle CEO lives "right down the road" from his Mar-a-Lago estate. However, he added that he never spoke to Ellison about TikTok. "I’ve spoken to many people about TikTok and there’s great interest in TikTok," he added.

Last week TikTok had gone dark in the US for a short period but, it soon went back online after Trump said he would postpone the ban right after taking charge of the Oval Office.

Notably, TikTok CEO Shou Chew also attend Donald Trump's presidential inauguration on January 20, along with some other tech leaders who have been making friendlier ties with the new administration.

Additionally, Congress also voted to ban TikTok in the US, saying that its ownership structure posed a security risk. The previous Joe Biden-led administration had argued in court for months that it was too much of a risk to allow a Chinese company to control the algorithm that handles what people see on their profile feeds on the app.