Perplexity makes a wild bid to merge with TikTok U.S.

A search startup valued at roughly $9 billion just submitted a formal bid to merge with TikTok US, hoping to absorb an app with 170 million American users.

On Saturday, Perplexity AI officially delivered the proposal to TikTok's parent company, ByteDance. Instead of an outright acquisition, the bid proposes creating a brand-new entity that combines Perplexity, TikTok US, and fresh capital partners.

According to a source familiar with the situation, the pitch is specifically structured as a merger to bypass ByteDance’s firm stance against an outright sale. Under the proposed setup, most of ByteDance's existing investors would be allowed to retain their equity stakes.

The video play

The source noted that a fair price for TikTok US is well north of $50 billion. The final cash figure would largely depend on how many current ByteDance shareholders want to cash out versus how many prefer to roll their equity over into the new company.

Perplexity experienced a meteoric rise over the past year, jumping from a $500 million valuation in early 2024 to about $9 billion by year-end, riding the generative AI boom despite facing recurring plagiarism accusations.

For Perplexity, the endgame is obvious: video. While giants like Google deploy AI Overviews and OpenAI pushes SearchGPT, search is rapidly shifting toward multimodal answers. Tapping into TikTok’s massive video archive would give Perplexity an unprecedented edge in real-time multimedia answers.

Racing the clock

The timing of the bid is nothing short of theatrical.

Federal legislation originally slated the divest-or-ban deadline for Sunday, January 19, the final day of the Biden administration. TikTok warned it would be forced to go dark unless the administration assured infrastructure and app store providers they would not be penalized.

However, President-elect Donald Trump told NBC News that he would most likely give TikTok a 90-day extension after taking office on Monday. TikTok CEO Shou Zi Chew subsequently posted a video thanking Trump for working toward a solution.

ByteDance has consistently pushed back against sale rumors, even calling reports of a potential Elon Musk buyout pure fiction. Perplexity believes its compromise proposal provides a viable third way out.

Why it matters

Perplexity's bid is an audacious long shot, but it signals just how desperate AI search engines are for proprietary content moats and mass distribution.

For everyday users and creators, blending Perplexity’s retrieval engine with TikTok’s content could fundamentally redefine discovery. Instead of reading summarized web links, users could get instant answers compiled from relevant user videos. That said, it is way too early to tell if this Frankenstein combination would actually work in practice.

For the AI industry, this marks a tactical escalation. Competitors are fighting over scrape rights and publisher partnerships. If an AI challenger manages to hook itself directly to the primary cultural engine of Gen Z, Google’s core search business faces a far more dangerous front than conventional text summaries.

However, we believe the proposal faces nearly insurmountable hurdles. Perplexity is essentially a lightweight player trying to swallow a $50 billion titan. More importantly, allowing existing ByteDance investors to retain significant equity directly clashes with the national security concerns that triggered the ban law in the first place. Smart PR move or not, the regulatory reality makes this deal almost impossible to close.