Just when it seemed that the TikTok saga could not take more twists and turns, along came the weekend of January 17. First, the Supreme Court upheld a law banning the app from the United States by January 19 unless Bytedance sold TikTok’s U.S. operations. Then AI search start-up Perplexity AI submitted a bid to merge with TikToK U.S. On January 19, TikTok shut down only to turn on the lights again on January 19. The same day, President-Elect Donald Trump said he would take executive action on his first day in office to allow TikTok to continue operating in the US temporarily. He also suggested the U.S. government could take partial ownership of the social media site. There’s a lot to unpack here—but of all these developments, the most intriguing is the Perplexity AI bid. Perplexity AI merging with TikTok U.S. would be a bold and imaginative move under any circumstance—but especially now, with TikTok’s future in the United States in limbo. Such a merger, if successful, could have far-reaching impacts, including making a combined Perplexity/TikTok a stronger Google challenger.
What Perplexity Proposes
Perplexity submitted a formal bid on January 18, 2025, to merge with TikTok’s U.S. operations, proposing the creation of a new entity that would combine Perplexity, TikTok U.S., and new equity partners. The structure of the proposal would allow ByteDance’s existing investors to retain their equity stakes in the new entity, addressing ByteDance’s reluctance to sell TikTok outright. Perplexity’s plan aims to integrate TikTok’s vast video-sharing platform with its AI-driven search capabilities, enhancing video content offerings and user interaction on its platform.
The merger is framed as a strategic partnership rather than a sale, which Perplexity believes will be more appealing to ByteDance while complying with U.S. regulatory demands. Of course, this move comes as TikTok faces mounting pressure to divest from ByteDance to avoid a U.S. ban, and the merger is positioned as a solution to preserve TikTok’s U.S. operations while addressing national security concerns.
The Donald Trump Factor
And, there is a wrinkle to the proposed merger. Trump proposed that the U.S. hold a 50% ownership stake in a joint venture involving TikTok’s U.S. operations, describing this as a way to “save” the app and ensure it stays under trusted control. Following Trump’s announcement, TikTok began restoring service, thanking him for his commitment to finding a solution that would keep the platform accessible to its 170 million U.S. users.
As of January 19, Perplexity AI had not issued a public response to Donald Trump’s statement. Trump’s comments about U.S. ownership could complicate Perplexity’s merger plans by introducing government involvement or competing proposals from other investors. While Perplexity has not directly addressed Trump’s statement, its proposal aligns with the goal of keeping TikTok operational under U.S.-based control, which could position it as a viable partner in resolving the app’s uncertain future.
Advantages of a Perplexity/TikTok U.S. Merger
Political intrigue aside, what exactly would the merger accomplish? A lot.
Access to a Massive User Base
TikTok’s 170 million U.S. users represent a vast and engaged audience that Perplexity AU could capitalize on to grow the AI-powered Perplexity search tool. TikTok’s temporary shutdown underscored its cultural relevance and user loyalty. This demonstrated a substantial user base eager for content and interaction. By merging with TikTok, Perplexity AI could introduce its Perplexity search tools to this readily available audience, transforming itself from a niche search engine into a mainstream tech player with expanded reach and influence.
Enhanced Content and Data Integration
TikTok’s strength resides in its extensive library of user-generated short-form videos and its ability to curate compelling content. While Perplexity would not necessarily acquire TikTok’s proprietary recommendation algorithm (if retained by ByteDance), the merger could still allow Perplexity to use this content to create a richer search experience. For instance, searching for information on the NFL playoffs could yield relevant TikTok videos alongside traditional results, providing a dynamic and engaging perspective. Furthermore, TikTok’s vast dataset, encompassing user preferences and content interactions, could be used to refine Perplexity’s AI models, improving the accuracy and relevance of its search results and potentially leading to new forms of content creation. This synergy could create a search experience that blends information with entertainment, attracting a broader user base.
Strengthened Position in AI
One of the more intriguing implications of a merger is how Perplexity could become a stronger AI powerhouse by by tapping into the synergies between TikTok’s vast user-generated content ecosystem and Perplexity’s expertise in AI-driven search and natural language processing.
TikTok’s repository of short-form videos, user interactions, and behavioral data offers a massive dataset for training advanced AI models. By integrating this data, Perplexity could refine its large language models (LLMs) and recommendation algorithms, improving its ability to generate contextually relevant and engaging responses. And combining video, text, and audio data would train Perplexity’s LLMs with multimodal data, making them more comprehensive.
Perplexity could expand its generative AI capabilities by experimenting with video-based generative models. This could lead to the creation of tools that summarize videos, generate captions, or even produce video content based on user queries. Such innovations would position Perplexity at the forefront of generative AI applications in consumer technology.
A Stronger Google Challenger
The merger would strengthen Perplexity’s position against tech giants like Google and Microsoft by combining search capabilities with a social media platform. This would not only diversify Perplexity’s offerings but also position it as a leader in the convergence of AI-driven search and social media.
In particular, a Perplexity/TikTok merger could challenge Google by redefining how users search and discover information. TikTok is already a preferred platform for Gen Z, and integrating Perplexity’s AI-powered search could create an experience that combines video-driven discovery with conversational search. This shift toward visual and interactive formats could lure users away from Google, especially for lifestyle and product-related queries.
The merger could also threaten Google’s advertising dominance. TikTok’s deep insights into user preferences, paired with Perplexity’s intent-driven AI, could deliver highly targeted ads that rival Google’s precision. And combining TikTok’s social commerce capabilities with AI-powered search could streamline shopping journeys, challenging Google’s product discovery and Shopping features.
TikTok and Perplexity could build a real-time, creator-driven knowledge graph, offering dynamic and timely search results. The partnership could erode Google’s relevance among younger users and brands, particularly as demand grows for more immersive and multimodal search experiences.
Increased Advertising Revenue Potential
TikTok has emerged as an adland darling. In 2024, TikTok generated
For Perplexity, whose ad business is just getting started, a merger with TikTok presents an opportunity to tap into this advertising cash cow. Using TikTok’s established ad infrastructure, targeting capabilities, and expertise, could boost Perplexity’s monetization strategies considerably. This could translate into diversified revenue streams, increased profitability, and a competitive advantage in the market, allowing Perplexity to invest further in its core AI technologies and expand its offerings.
Mitigated Ban Risks
With TikTok facing a potential U.S. ban, a merger offers a solution that could preserve TikTok’s presence while addressing national security concerns. The combined entity could alleviate concerns about foreign influence and data security. Structuring the deal as a merger rather than an outright sale might also ease the regulatory process. This could be a mutually beneficial arrangement, allowing TikTok to continue operating in the United States
Challenges
But of course, there are many challenges to the deal, ranging from operational integration to regulatory hurdles. Here are a few:
Rebuilding Infrastructure
To comply with U.S. regulations, a merged Perplexity/TikTok entity would face a massive undertaking in overhauling its digital infrastructure. This includes migrating vast amounts of user data to servers located exclusively within the United States, ensuring full transparency and potential modification of TikTok’s algorithm, and implementing content moderation systems that meet U.S. government standards. This would require significant financial investment and technical expertise.
Regulatory Hurdles
Trump’s supportive comments notwithstanding, any deal involving TikTok will face intense scrutiny from lawmakers concerned about national security risks and data privacy. The Committee on Foreign Investment in the United States (CFIUS) would conduct a thorough review, potentially imposing conditions or even blocking the deal. Significant political pressure could complicate the approval process and potentially delaying or derailing the merger.
Operational Integration
Integrating Perplexity’s and TikTok’s technologies, aligning their business models and monetization strategies, and merging contrasting company cultures would be complex. Finding a cohesive way to integrate a search engine with a short-form video platform while retaining user engagement and achieving profitability would be a major hurdle.
What’s Next?
Trump’s return to power introduces both opportunities and risks. Trump’s January 19 comments, referring to TikTok as “a goldmine” that should remain operational under American control, hinted at his willingness to facilitate a deal. However, his administration may impose strict conditions on any merger or acquisition involving TikTok, including compliance with national security protocols and restrictions on data sharing.
Trump’s intervention could accelerate negotiations but also heighten regulatory scrutiny. Over the years, Trump has both loathed TikTok and supported the app. It was under his first administration that a law to ban the app was first proposed. But then he changed course and became more supportive of the app during the 2024 presidential election. What are his true intentions? It’s just too difficult to say one way or another until he acts.
The TikTok saga could change course 100 times by the time you read this. But there’s too much money wrapped up in TikTok, and too many influential parties involved, for TikTok to go away. One way or another, TikTok will likely stay in the United States, with or without Perplexity. The political and economic winds are blowing too strongly in TikTok’s favor.
