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Perplexity AI Proposes TikTok Merger with 50% U.S. Government Stake

Jan 27, 2025 - lawyer-monthly.com
Perplexity AI has proposed a merger with TikTok's U.S. operations to ByteDance, suggesting that the U.S. government could own up to 50% of the new entity post-IPO, without voting rights or board representation. This revised proposal follows feedback from the Trump administration and aims to comply with a law banning TikTok in the U.S. unless it severs ties with ByteDance. The plan allows ByteDance to retain its stake while ceding full U.S. board control and not transferring TikTok's proprietary algorithm. The proposal aligns with former Treasury Secretary Steven Mnuchin's strategy to reduce Chinese ownership and disconnect TikTok from ByteDance.

The proposal comes amid heightened interest from investors in acquiring a stake in TikTok, with President Trump expressing optimism about reaching a deal soon. Despite reports, Trump denied discussing TikTok with Oracle CEO Larry Ellison. The U.S. government has raised national security concerns over TikTok's ownership structure and data collection practices, although no public evidence has been provided of data sharing with Chinese authorities. TikTok was briefly offline in the U.S. but returned after Trump delayed the ban. The Biden administration continues to argue against Chinese control of TikTok's algorithm in court.

Key takeaways:

  • Perplexity AI proposed a merger with TikTok's U.S. business, allowing the U.S. government up to a 50% ownership stake without voting rights.
  • The proposal aims to comply with U.S. laws banning TikTok unless it severs ties with ByteDance, while allowing ByteDance to retain its stake.
  • The U.S. government delayed the TikTok ban enforcement for 75 days, and President Trump expects a deal within 30 days.
  • Concerns over TikTok's ownership structure and data collection persist, with no public evidence of data sharing with Chinese authorities.
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