According to a person familiar with the situation, Perplexity AI has submitted a fresh proposal to TikTok’s parent company that would permit the US government to own up to 50% of a new firm that would be created by combining Perplexity with TikTok’s US operations.
The proposal, which was turned in last week, is an update to an earlier plan that the AI startup had sent to ByteDance, the parent company of TikTok, on January 18, the day before the law that forbids the app entered into force.
The initial proposal, to which ByteDance has not replied, aimed to establish a new framework that would incorporate capital from other investors and combine Perplexity, a San Francisco-based company, with TikTok’s U.S. operation.
According to the source, who was not authorized to discuss the proposal, the new plan would allow the U.S. government to own up to half of that new entity when it makes an initial public offering of at least $300 billion. According to the source, Perplexity’s proposal was changed in response to input from the Trump administration.
According to the source, the government’s shares would not have voting rights if the idea were to succeed. Additionally, the government would not be granted a seat on the board of the new corporation.
A request for comment was not immediately answered by ByteDance or TikTok.
ByteDance’s investors would benefit from the arrangement since it would not have to sever all of its connections with TikTok. However, the individual stated that it would need to permit complete U.S. board control.
According to a document reviewed by the Associated Press, the proposal calls for the China-based tech giant to contribute to TikTok’s U.S. business without using the secret algorithm that determines what users see on the app.
The plan appears to follow a tactic that former Treasury Secretary Steven Mnuchin, who served during Trump’s first term, talked about on Fox News Sunday Morning Futures on Sunday. He said that a new investor in TikTok could just reduce the amount of Chinese ownership and comply with the law. Mnuchin has already indicated that he would like to invest in the business.
However, he added, the technology must be cut off from China. It must be unplugged from ByteDance. China would never permit us to have something like that in their country.
A number of investors are showing interest in TikTok, which coincides with the Perplexity plan. Late on Saturday, President Donald Trump stated that he anticipates an agreement to be reached within 30 days.
During an Air Force One journey from Las Vegas to Miami, Trump also claimed that he had not spoken with Larry Ellison, the CEO of software company Oracle, about a deal, even though there had been a rumor that Oracle and outside investors were thinking about acquiring TikTok’s global business.
I have a lot of people chatting to me. Trump said, “Very substantial people.” The United States will gain a great deal from it, and we are very interested in it. Only if it benefited the US would I do it.
A bipartisan law approved last year stated that if TikTok did not sever its ties with ByteDance, it would be prohibited in the US by January 19. Trump signed an executive order to stop the law’s enforcement for 75 days after the Supreme Court upheld it.
On Air Force One, Trump mentioned that Ellison lived close to his Mar-a-Lago resort, but he also said, “I never spoke to Larry about TikTok.” I’ve discussed TikTok with a lot of folks, and they seem to be really interested in it.
Following Trump’s announcement that he would delay the ban, TikTok reopened in the United States following a temporary outage a week ago. During his first term, Trump had tried in vain to have the platform banned in the United States. However, he has subsequently changed his mind and said that the platform helped him attract more young people in the presidential race last year.
Shou Chew, the CEO of TikTok, and a few other tech executives who have been establishing more cordial relations with the incoming government attended Trump’s inauguration on January 20.
Because of worries that TikTok’s ownership structure posed a security risk, Congress decided to outlaw the app in the United States. For months, the Biden administration argued in court that letting a Chinese business manage the algorithm that determines what users view on the app was too risky. Concerns regarding user data gathered on the platform were also voiced by officials.
Nevertheless, the United States has not yet made public any proof that TikTok gave Chinese authorities user data or permitted them to alter its algorithm.
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From South Bend, Indiana, Hadero reported.
