AI startup Perplexity AI proposes merger with TikTok U.S. in bid to reshape online content landscape
AI search engine startup Perplexity AI has submitted a proposal to merge with TikTok U.S., according to a report from CNBC, citing an anonymous source familiar with the matter. The bid was reportedly made on Saturday to ByteDance, the Chinese company that owns TikTok.
The report surfaced just one day before TikTok resumed operations in the U.S., following President-elect Donald Trump’s intervention to keep the app online. The platform confirmed its return on X, thanking President-elect Trump for ensuring its continued accessibility.
“Perplexity AI officially made a play for TikTok on Saturday, submitting a bid to its parent company, ByteDance, to create a new merged entity combining Perplexity, TikTok U.S. and new capital partners,” CNBC reported.
The merger plan put forth by Perplexity AI would allow ByteDance’s current investors to maintain their stakes while introducing new synergies between the two platforms. If the deal moves forward, the combined entity could take several months to finalize. ByteDance has not openly expressed a willingness to sell TikTok U.S., but Perplexity AI is betting on the merger approach as a more appealing alternative.
The proposal also includes forming a new entity by merging TikTok U.S. with New Capital Partners, a private equity group, according to the source, who requested anonymity due to the confidential nature of the discussions.
“The new structure would allow for most of ByteDance’s existing investors to retain their equity stakes and would bring more video to Perplexity, according to a source familiar with the situation, who asked to remain anonymous due to the confidential nature of the potential deal.”
ByteDance has yet to respond to inquiries about the potential deal, while representatives from TikTok and New Capital Partners were unavailable for comment.
Why Perplexity AI Is Eyeing TikTok
Perplexity AI, known for its advanced search tools that deliver concise answers with sources and citations, is powered by technologies like OpenAI’s models and Meta Platforms’ open-source Llama model. By merging with TikTok, the company could broaden its footprint, integrating its AI-driven insights with the video platform’s massive audience and cultural influence.
TikTok has become a mainstay in U.S. culture, engaging nearly half the population and serving as a vital platform for small businesses and content creators. The platform’s role in shaping trends and driving online commerce makes it a highly attractive partner for Perplexity AI’s ambitions.
Perplexity AI was founded in 2022 by Aravind Srinivas, Andy Konwinski, Denis Yarats, and Johnny Ho to redefine search by providing direct answers to user questions. Competing with giants like Google and OpenAI, the company recently launched an iOS app to make its AI-driven search engine more accessible to mobile users.
The startup saw its valuation skyrocket from $500 million at the start of 2024 to approximately $9 billion by year’s end. The company’s rapid growth was fueled by surging investor interest in generative AI, despite facing accusations of plagiarism along the way.
AI-assisted search has emerged as a significant area of focus for investors, as it poses a potential challenge to Google’s dominance in how people access information online. OpenAI, which ignited the generative AI wave with ChatGPT in late 2022, expanded into search last year with the introduction of SearchGPT. In response, Google rolled out “AI Overviews,” offering users concise answer summaries directly at the top of search results.
Perplexity AI’s dramatic rise underscores the broader shift in consumer behavior and investor priorities as generative AI reshapes the landscape of online search and information retrieval.
TikTok’s Immediate Return
TikTok’s U.S. operations were restored just hours after the intervention by President-elect Trump, avoiding a shutdown. The platform acknowledged its return in a post on X (formerly Twitter), expressing gratitude for Trump’s efforts to keep the app available to American users.
While the merger proposal remains in its early stages, it signals a bold move by Perplexity AI to align its capabilities with TikTok’s unparalleled reach, potentially creating a powerful new player in the tech and content space.