Is An AI Company Plotting To Take Over TikTok?

Perplexity AI’s latest proposal for TikTok’s US operations could reshape the app’s future, offering a potential solution to regulatory challenges while aiming for a staggering $300 billion valuation.

At a Glance

  • Perplexity AI proposes merger with TikTok US, offering 50% stake to US government
  • Deal aims for $300 billion valuation at IPO
  • ByteDance would retain ties to TikTok with “full US board control”
  • Proposal excludes TikTok’s proprietary content recommendation algorithm
  • Plan attempts to address US security concerns while appeasing Chinese interests

Perplexity AI’s Bold Proposal

In a strategic move to navigate the complex regulatory landscape surrounding TikTok, Perplexity AI has put forward a revised merger proposal for the popular social media platform’s US operations. The plan, which builds on a previous proposal made on January 18, envisions a merger that would allow the US government to acquire up to a 50% ownership stake in a new entity.

This ambitious proposal aims to address the concerns that led to TikTok’s ban under a bipartisan law, while simultaneously targeting a valuation of $300 billion or more. The US government would acquire its stake during the entity’s initial public offering, potentially creating a unique public-private partnership in the tech sector.

Balancing Act: US Control and Chinese Interests

A key aspect of the proposal is the careful balance it attempts to strike between US control and Chinese interests. While ByteDance would retain ties to TikTok, the new entity would have “full US board control.” This arrangement seeks to address US security concerns while potentially satisfying Chinese regulators who have been wary of foreign control over Chinese technology.

“The technology needs to be disconnected from ByteDance,” Steven Mnuchin said.

Notably, the proposal excludes TikTok’s proprietary algorithm for personalizing user content, a move that aligns with strategies suggested by former Treasury Secretary Steven Mnuchin to separate TikTok’s technology from Chinese ownership. This exclusion could be crucial in gaining approval from Chinese authorities, who have previously signaled reluctance to allow core algorithms to fall under foreign control.

Government Involvement and Valuation Goals

The proposed structure of the deal is unique in its approach to government involvement. While the US government would acquire a significant stake, it would not include voting rights or a board seat. This arrangement could potentially alleviate concerns about direct government control over a social media platform while still providing a level of oversight that lawmakers have been demanding.

“Numerous people are talking to me. Very substantial people. We have a lot of interest in it, and the United States will be a big beneficiary. I’d only do it if the United States benefits,” Trump said.

The ambitious $300 billion valuation target underscores the perceived value of TikTok’s US operations. This valuation, if achieved, would place the new entity among the most valuable tech companies globally, reflecting the platform’s massive user base and potential for future growth.

Challenges and Uncertainties Ahead

Despite the innovative approach of Perplexity AI’s proposal, significant challenges remain. The US has not publicly proven that TikTok shared user data with Chinese authorities, a key concern that led to the ban. Additionally, the proposal must navigate complex international relations and regulatory requirements from both the US and China.

ByteDance board member William Ford told Caixin Global last week the company hoped to line up an alternative to selling its TikTok assets.

As discussions about TikTok’s future continue, with interest from various American investors and companies, the outcome remains uncertain. The proposal from Perplexity AI represents just one of potentially many solutions being explored to keep TikTok operating in the US while addressing national security concerns. As the situation unfolds, all eyes will be on how this delicate balance between technology, national security, and international business interests is ultimately struck.