Perplexity AI has proposed a novel solution to the TikTok security concerns, suggesting a merger with a US-based entity where the US government could own up to 50% of the new company. This proposal, aimed at addressing national security concerns, allows for a partial divestment from ByteDance while maintaining a US presence in the company.
Perplexity AI has proposed a solution to the ongoing TikTok dilemma, suggesting a merger between its U.S. operations and TikTok's American business. This proposal, submitted to ByteDance last week, envisions the U.S. government acquiring up to 50% ownership in the newly formed entity once it reaches a valuation of at least $300 billion through an initial public offering. Crucially, the government's stake wouldn't grant voting rights or a seat on the board.
This structure is a departure from Perplexity's initial plan presented in January, which sought a new entity with diverse investor participation. The revised proposal appears to be influenced by feedback received from the Trump administration, aiming to address national security concerns without a complete divestiture from ByteDance.Under this plan, ByteDance would retain a role in the merged entity but relinquish control over TikTok's U.S. algorithm. This echoes a strategy previously discussed by Steven Mnuchin, former Treasury Secretary under President Trump, who advocated for diluting Chinese ownership to satisfy the law. Mnuchin emphasized the need to sever the technological connection between TikTok and ByteDance, highlighting the impossibility of China relinquishing control over such a platform.This proposal comes amidst heightened interest in TikTok from various investors. President Trump expressed confidence that a deal could be finalized within 30 days, indicating a swift resolution to the ongoing saga. While Trump denied discussing a deal with Larry Ellison, CEO of Oracle, reports suggest that Oracle, along with other investors, is exploring a takeover of TikTok's global operations.The possibility of a U.S. ban on TikTok was averted after Trump announced a temporary suspension of the ban's enforcement. This reversal from his previous stance on banning the platform highlights the perceived electoral advantage TikTok offered during the 2020 presidential election.The initial congressional ban stemmed from concerns about TikTok's ownership structure posing a security risk. The Biden administration echoed these concerns, arguing that allowing a Chinese company to control the algorithm driving user experiences on the platform posed a significant threat. They also raised concerns about user data collected by TikTok potentially being accessed by Chinese authorities. However, concrete evidence of such data breaches or algorithm manipulation remains absent.
Business Politics PERPLEXITY AI TIKTOK BYTEDANCE GOVERNMENT STAKES NATIONAL SECURITY US-CHINA RELATIONS TECH MERGERS
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