On Saturday, a CNBC report revealed that Perplexity AI had submitted a bid to merge with TikTok’s U.S. operations, owned by ByteDance Ltd. The proposal aims to create a new entity that would enable ByteDance’s existing investors to retain their stakes. This move comes at a time when TikTok faces significant regulatory challenges in the United States, highlighted by a Supreme Court ruling that upheld a law potentially forcing the app’s shutdown due to national security concerns.
Perplexity AI, which has seen its valuation soar from $500 million at the beginning of 2024 to approximately $9 billion by year’s end, represents an intriguing contender in this scenario. The AI startup’s interest in TikTok could be seen as a strategic expansion into social media, leveraging TikTok’s massive user base – more than 170 million – to enhance its own AI-driven search engine capabilities.
The backdrop to this potential merger is the ongoing debate over TikTok’s operations in the U.S. The Supreme Court’s decision last Friday to uphold the law mandating TikTok to either sell its U.S. operations or face a ban has set a critical deadline for Sunday. However, outgoing President Joe Biden has stated he would not enforce the ban during his remaining days in office, leaving the decision to his successor, Donald Trump. Trump, in a recent interview, indicated he would “most likely” grant TikTok a 90-day extension to find a buyer, with an announcement possibly coming on Monday, his inauguration day.
The complexity of finding a buyer for TikTok lies not just in ByteDance’s reluctance to sell but also in the app’s high valuation, which is speculated to be around $50 billion. This price tag narrows down the pool of potential acquirers to a select group of billionaires or investment coalitions. Names like Elon Musk, who has been evaluated by the Chinese government as a potential new owner, and a team of investors including Frank McCourt and Kevin O’Leary, have been floated as possible candidates.
Perplexity AI’s bid could be appealing due to its structure, allowing existing ByteDance investors to retain their stakes, potentially making the transition smoother for both parties involved. This merger could also introduce innovative AI functionalities to TikTok, enhancing user engagement through personalized content and search capabilities, while also providing Perplexity with a massive platform to deploy its technology.
The situation underscores the broader implications of national security concerns intersecting with global tech business, where AI and social media’s convergence could redefine how content is consumed and monetized. As the deadline approaches, the outcome of these negotiations will not only impact TikTok’s future in the U.S. but also set a precedent for how tech companies navigate geopolitical tensions, regulatory landscapes, and the digital economy’s ever-evolving demands.
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