Perplexity AI makes bid to merge (acquire) with US-based TikTok

The gist:

• Perplexity AI submitted a bid to TikTok's parent company ByteDance on Saturday proposing that Perplexity merge with TikTok's U.S. operations, CNBC has learned.
• A source familiar with the situation revealed that the new structure will allow most of ByteHop's existing investors to retain their stakes and bring more video content to Perplexity.
• While any potential deal could take months to complete, President-elect Donald Trump said he would "likely" give TikTok an additional 90 days to reach an agreement.

Perplexity AI made its move official on Saturday with a bid to acquire TikTok. it submitted a bid to TikTok's parent company, ByteDance, with plans to create a new merged entity that would bring together Perplexity, TikTok's U.S. operations and a new capital partner, CNBC has learned.

A source, who requested anonymity due to the confidential nature of the potential deal, said the new structure would allow most of ByteHop's existing investors to retain their stakes and bring more video content to Perplexity.

Perplexity AI is an artificial intelligence search engine startup competing with OpenAI and Google. It was valued at around $$5 billion at the beginning of 2024 and around $9 billion at year-end, thanks to growing investor interest in the generative AI boom and controversy over allegations of plagiarism.

Investors see AI-assisted search as one of the main risks facing Google because it could change the way consumers get information online. Last year, OpenAI was recognized as a leader in AI-assisted search at the end of 2022 with the ChatGPT Google later introduced "AI Overview" in search, allowing users to quickly see a summary of the answer at the top of the search results.

While any potential deal between Perplexity AI and ByteDance could take months to complete, and TikTok has already said it will "cease operations" in the U.S. on Sunday unless the Biden administration guarantees that it won't penalize Apple, Google, and other service providers for hosting it, President-elect Donald Trump told NBC News on Saturday that he would "likely" give TikTok an additional 90 days after he's sworn in on Monday to reach a deal. "But President-elect Donald Trump told NBC News on Saturday that he would "probably" give TikTok an extra 90 days after he's sworn in on Monday to reach a deal.

"I want to thank President Trump for his commitment to working with us to find a solution so that TikTok can continue to be used in the United States," TikTok CEO Shouzhi Zhou said in a video posted to TikTok on Friday.

ByteDance has publicly stated that it will not sell TikTok's U.S. business, which is one of the reasons Perplexity AI thinks its bid has a chance - because the proposal is for a merger, not a sale, sources told CNBC.

The source believes a reasonable price is "well above $50 billion," but the final amount of the proposal will depend in part on which of ByteHop's existing shareholders want to remain part of the new entity, and which shareholders want to cash out.

CORRECTION: Perplexity AI's bid for TikTok will create a new merged entity that will bring together Perplexity, TikTok's U.S. operations and a new capital partner. A previous version of this article misstated one of the participants.