Perplexity Proposes 'Merger' with TikTok's US Entity, Not 'Acquisition'

American AI search engine startup Perplexity has proposed a merger with TikTok's US entity. Given TikTok's opposition to selling its US entity, Perplexity has suggested a compromise to establish a new entity through a merger.

On the 18th (local time), CNBC reported, citing internal sources, that Perplexity submitted a bid to ByteDance, TikTok's parent company, proposing to establish a new entity that includes Perplexity, TikTok's US entity, and some investors. According to the report, Perplexity stated in the proposal that most of ByteDance's existing investors could retain their shares through the new structure. Perplexity is an AI search engine startup competing with OpenAI and Google, currently valued at approximately $9 billion.

Perplexity has made a bold move by proposing a merger instead of an acquisition of TikTok's US entity. This decision is based on the belief that a merger is more feasible given ByteDance's opposition to selling TikTok's US entity. Previously, the US Supreme Court rejected ByteDance's request to suspend the 'TikTok Ban Act,' and ByteDance announced that it would completely halt its services in the US with the enactment of the law on the 19th.

The shift in stance by US President-elect Donald Trump regarding the TikTok Ban Act is expected to positively influence the Perplexity merger. President-elect Trump expressed his intention to defer the TikTok Ban Act in an interview with NBC. He stated, "The '90-day extension' of the deadline for the sale of TikTok's US entity is most likely," adding, "It will probably be announced on the 20th, the day of the inauguration."

The estimated transaction size of $50 billion will likely be determined by which of ByteDance's existing shareholders participate in the new entity and who liquidates their shares. CNBC reported, "Perplexity's proposal is a merger, not an acquisition, which increases the likelihood of the deal being completed," adding, "However, it will take at least a few months for the transaction between the two companies to be finalized."

Silicon Valley Correspondent: Song Young-chan 0full@hankyung.com