A deal where the U.S. government could eventually own up to 50% of TikTok U.S. would’ve sounded impossible not that long ago. But that’s exactly what Perplexity AI is now floating in a revised merger proposal to ByteDance — and it’s a sign of how quickly TikTok has shifted from “popular app” to something Washington treats more like strategic infrastructure.
According to CNBC, Perplexity’s updated plan would create a new U.S. holding company, “NewCo,” combining Perplexity and TikTok’s U.S. business. In exchange, ByteDance would contribute TikTok U.S. — but notably, without its core recommendation algorithm — and ByteDance’s existing investors would receive equity in the new entity. The proposal also calls for new third-party capital to help fund growth and to pay a one-time dividend to ByteDance investors in exchange for “simplified governance.”
The headline-grabbing detail is the government stake. Under the revised structure, the U.S. government could own up to half of NewCo after a future IPO, reportedly tied to a valuation of at least $300 billion. It’s an unconventional attempt to thread a needle: address U.S. national security concerns while avoiding a clean “sale” of TikTok, which ByteDance has repeatedly resisted.
That merger framing is part of why Perplexity believes it has a real shot. Even though ByteDance has publicly implied it doesn’t want to sell TikTok U.S., a merger could give the company and its investors a way to stay involved — while still satisfying the political demand for American control of the U.S. version of the platform.
Perplexity’s interest also makes sense strategically. The company has become one of the most aggressively watched AI search startups, especially as investors look for credible threats to Google’s dominance in how people access information online. Perplexity reportedly started 2024 valued around $500 million and ended the year near $9 billion, riding the boom in AI-assisted search — even as it faced controversy around plagiarism accusations. At the same time, the competitive landscape has gotten more crowded fast, with OpenAI launching SearchGPT and Google pushing “AI Overviews” directly into its core search product.
TikTok gives Perplexity something most AI startups don’t have: distribution at massive scale, and a product built around discovery. TikTok’s real value isn’t just viral video — it’s the behavioral feedback loop underneath it. That data is incredibly powerful in the AI era, because it shows, in real time, what people engage with, what spreads, and what gets ignored. That’s exactly the kind of signal modern AI systems want more of.
The offer is landing in the middle of an already chaotic political situation. President Donald Trump has temporarily restored TikTok in the U.S. and has suggested a solution involving an American stakeholder purchasing the company and then selling a 50% stake to the U.S. government. TikTok CEO Shou Zi Chew has also publicly thanked Trump for his willingness to find a path forward that keeps the app available in the U.S. Meanwhile, Trump said this weekend he expects a decision on TikTok’s future in the next 30 days.
Perplexity isn’t the only one circling. CNBC notes that other rumored bidders or suitors include Microsoft, Oracle, and potentially Elon Musk. But Perplexity’s proposal stands out because it doesn’t just solve for ownership — it tries to solve for politics, too.
Even if the deal never happens, the fact that it’s being seriously discussed says a lot. The U.S. isn’t just regulating a platform anymore. It’s entertaining the idea of becoming a shareholder. And that’s a major shift in how governments are starting to think about data-heavy consumer products in the AI age: not as apps that can be managed with policy, but as assets that may need to be controlled directly.
This analysis is based on reporting from CNBC.
Image courtesy of Unsplash.
This article was generated with AI assistance and reviewed for accuracy and quality.
