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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 has learned.
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.
Perplexity AI, the artificial intelligence search engine startup competing with OpenAI and Google, started 2024 with a roughly $500 million valuation and ended the year with a valuation of about $9 billion, after attracting increasing investor interest amid the generative AI boom — as well as controversy over plagiarism accusations.
AI-assisted search has been viewed by investors as one of Google’s key risks, as it potentially changes the way consumers access information online. Last year, OpenAI, which started the generative AI craze in late 2022 with ChatGPT, introduced a search engine called SearchGPT. Google later launched “AI Overviews” in search, allowing users to see a quick summary of answers at the top of results.
Though any potential transaction between Perplexity AI and ByteDance would likely take months to complete — and TikTok has said the app will “go dark” in the U.S. on Sunday unless the Biden administration assures it won’t punish Apple, Google and other service providers for hosting it — President-elect Donald Trump told NBC News on Saturday that he “most likely” would give TikTok 90 more days to work out a deal after he is sworn into office on Monday.
In a video posted to TikTok on Friday, CEO Shou Zi Chew said, “I want to thank President Trump for his commitment to work with us to find a solution that keeps TikTok available in the United States.”
ByteDance has publicly implied it will not sell TikTok U.S., which is part of why Perplexity AI believes it has a shot with its bid — since the proposal is a merger rather than a sale, the source told CNBC.
The source believes a fair price is “well north of $50 billion” but that the final number attached to the proposal will be decided, in part, by which of ByteDance’s existing shareholders want to remain part of the new entity and which want to cash out.
CORRECTION: Perplexity AI’s bid for TikTok would create a new merged entity combining Perplexity, TikTok U.S. and new capital partners. A previous version of this article misstated one of the participants.