Perplexity AI proposes U.S. government stake in TikTok

Perplexity AI has put forward a new proposal to TikTok’s parent company, ByteDance, in a bid to resolve ongoing national security concerns surrounding TikTok’s U.S. operations. The updated plan, submitted last week, suggests creating a new entity that would merge Perplexity with TikTok’s U.S. business. The key feature of this proposal is the U.S. government’s potential to own up to 50% of the new company after an initial public offering valued at $300 billion or more.

The proposal revises a previous plan submitted by Perplexity to ByteDance on January 18, just before a U.S. law banning TikTok went into effect. ByteDance has yet to respond to the initial plan, which sought to combine Perplexity and TikTok’s U.S. operations and included other investor contributions.

Under the new proposal, the U.S. government’s stake would not come with voting rights or a seat on the company’s board, but it would give the government significant financial involvement in the new entity. ByteDance would still be able to retain partial ties to TikTok, but the new structure would operate with full control from a U.S.-based board.

Crucially, the proposal would involve ByteDance contributing TikTok’s U.S. operations to the new company without the proprietary algorithm that governs what content users see on the app. This would address one of the core security concerns, as the algorithm has been viewed as a potential tool for Chinese government influence.

This proposal comes amid growing interest from investors and policymakers regarding TikTok’s future in the U.S. President Donald Trump recently indicated that a deal could be reached within 30 days. He has emphasized that any agreement must benefit the United States, although he also downplayed reports of Oracle CEO Larry Ellison’s involvement in the discussions.

The U.S. government’s concerns about TikTok primarily stem from its ownership structure, with lawmakers citing the potential for China to influence the platform's algorithm and access U.S. user data. However, to date, no public evidence has been provided linking TikTok to Chinese authorities or showing that the app shares data with the Chinese government.

As the deadline for TikTok to sever ties with ByteDance passed in mid-January, President Trump issued a 75-day executive order delaying the enforcement of the ban. The Biden administration has since continued to review national security risks associated with TikTok, with Congress urging further action to mitigate any potential threats.

The proposal by Perplexity AI represents a potential pathway for resolving the ongoing debate over TikTok’s operations in the U.S. and could play a pivotal role in determining the platform’s future.