New proposal from Perplexity AI on TikTok may result in the U.S. government acquiring 50% ownership interest.
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New proposal from Perplexity AI on TikTok may result in the U.S. government acquiring 50% ownership interest.


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Perplexity AI has submitted a fresh proposal to TikTok's parent company that would permit the US government to own up to 50% of a new firm that would be created by combining Perplexity with TikTok's US operations.

The suggestion, which was turned in last week, is an update to an earlier strategy the AI startup had given to ByteDance, the parent company of TikTok, on January 18, the day before the law that forbids the app entered into force.

The initial proposal, to which ByteDance has not replied, aimed to establish a new framework that would incorporate capital from other investors and combine Perplexity, a San Francisco-based company, with TikTok's U.S. operations.

According to the person, who was not authorised to discuss the proposal, the new plan would allow the U.S. government to own up to half of that new entity when it makes an initial public offering of at least $300 billion.

According to the source, Perplexity's proposal was changed in response to input from the Trump administration. The government's shares would also not have voting rights if the idea were to succeed.

Additionally, the government would not be granted a seat on the board of the new business. A request for comment was not immediately answered by ByteDance or TikTok.

ByteDance would not have to sever all ties with TikTok, which would be good for its investors, but it would have to allow a “full U.S. board control,” the person said.

According to a document seen by the Associated Press, the proposal calls for the China-based tech company to contribute TikTok’s U.S. business without the proprietary algorithm that drives what users see on the app, in exchange for equity in the new structure that emerges.

The plan appears to follow a tactic that former Treasury Secretary Steven Mnuchin, who served during Trump's first term, talked about on Sunday Morning: a new investor in TikTok could just "dilute down" the Chinese ownership and comply with the law. Mnuchin has already indicated that he would like to invest in the business.

He went on to say, "But the technology needs to be disconnected from China." It needs to be disconnected from ByteDance. There’s absolutely no way that China would ever let us have something like that. A number of investors are showing interest in TikTok, which coincides with the Perplexity plan.

Late on Saturday, President Donald Trump stated that he anticipates an agreement to be reached within 30 days. During a flight from Las Vegas to Miami aboard Air Force One, Trump stated that he had not engaged in discussions regarding a potential deal with Larry Ellison, the CEO of Oracle, despite reports indicating that Oracle, along with external investors, was contemplating a takeover of TikTok's global operations.

"Numerous people are talking to me, very substantial people." Trump remarked. "We have a lot of interest in it  and the United States will be a big beneficiary. I will only do it if the United States benefits."

According to a bipartisan law enacted last year, TikTok was set to be banned in the United States by January 19 unless it severed its ties with ByteDance. Although the Supreme Court upheld this legislation, Trump subsequently issued an executive order to suspend the enforcement of the law for a period of 75 days.

Trump, while aboard Air Force One, remarked that Ellison resides “right down the road” from his Mar-a-Lago estate, but clarified, “I never spoke to Larry about TikTok. I have spoken to many people about TikTok and there’s great interest in TikTok.”

Recently, TikTok was temporarily suspended in the United States, but it resumed operations after Trump announced a delay in the ban. During his first term, Trump had made an unsuccessful attempt to impose a ban on the application.

However, he has since changed his stance and acknowledged that the platform contributed to his appeal among younger voters in the previous presidential election.

On January 20, TikTok CEO, Shou Chew was present at Trump’s inauguration, alongside several other technology leaders who have been cultivating more amicable relationships with the new administration.

Because of worries that TikTok's ownership structure posed a security risk, Congress decided to outlaw the app in the United States. For months, the Biden administration argued in court that letting a Chinese business manage the algorithm that determines what users view on the app was too risky.

Concerns regarding user data gathered on the platform were also voiced by officials. Nevertheless, the United States has not yet made public any proof that TikTok gave Chinese authorities user data or permitted them to alter its algorithm.


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