Perplexity AI, a rising contender in the search engine and AI chatbot world, has submitted a bid to merge with TikTok's US operations.
The proposed merger could give Perplexity a competitive edge against internet giant Google, shaking up the search engine and social media industries.
TikTok Faces Potential Shutdown as Perplexity AI Proposes Merger with US Branch
This bold move comes at a time when TikTok is facing possible shutdowns in the US unless it severs its ties with its Chinese parent company, ByteDance.
Founded in 2022, Perplexity AI is a search engine that combines AI to provide answers to questions and also acts as an AI chatbot. The company recently expanded its services with a shopping assistant powered by Stripe.
Despite being a newer player, Perplexity has already gained significant attention, with backing from investors like Amazon's Jeff Bezos and Nvidia, two tech titans. It has a valuation of $8 billion, following its most recent funding round, Investor'sBusinessDaily said.
TikTok, the popular short video platform, is currently facing a federal law that may force its sale or closure in the US due to concerns over data security. The law, passed by Congress, aims to prevent TikTok from sharing US user data with the Chinese government.
To avoid a ban, TikTok has been given a temporary extension by President-elect Donald Trump, who has signaled he will allow more time for ByteDance to resolve the matter. Meanwhile, TikTok temporarily shut down its U.S. operations in response to the legal pressure.
Perplexity AI's $8B Merger Proposal to TikTok US Sparks Debate Over Feasibility
The merger proposal from Perplexity AI would see the company combine with TikTok's US business, creating a new entity.
Perplexity's bid suggests that ByteDance's existing investors would keep their shares, while the operations would shift to Perplexity, forming a unified entity that could rival the dominance of companies like Google and Meta Platforms.
The new merged company would also bring in fresh investors to support the deal. However, ByteDance is reportedly hesitant to sell TikTok's US operations, although it may consider a merger under the right terms.
A significant hurdle for Perplexity AI in this bid is the size difference between the companies. According to DomainB, TikTok's US operations are valued at around $50 billion, much higher than Perplexity's $8 billion.
Industry analysts, such as Daniel Ives from Wedbush, have expressed doubts about the feasibility of the deal, considering Perplexity's smaller value compared to TikTok.
Furthermore, other big players like Elon Musk's Tesla and his social media platform X have reportedly been exploring options to acquire TikTok or partner with ByteDance.
