AI-powered search startup Perplexity has submitted a bid to merge with TikTok’s US business, just hours before the popular social media platform faces a potential ban. The move comes as ByteDance, TikTok’s Chinese parent company, faces a January 19 deadline to sell the app’s US operations or face a complete shutdown under a law passed by Congress and signed by President Biden last spring.
The proposed merger raises significant questions about feasibility, given the massive valuation gap between the two companies. Perplexity was recently valued at $9 billion, while TikTok’s US operations are estimated to be worth between $40 billion and $50 billion, according to Wedbush analyst Dan Ives. Despite this disparity, a person familiar with the matter indicated that the combined entity would include other institutional investors, though their identities have not been disclosed.
Perplexity’s backing by tech giants and major investors could provide the financial muscle needed for such an ambitious acquisition. The AI startup counts SoftBank, Nvidia, and venture capital firm IVP among its deep-pocketed backers. To date, Perplexity has secured $914 million in funding, according to PitchBook data. The company’s valuation has skyrocketed from $1 billion in April 2024 to $9 billion following its most recent funding round in December.
The startup has made waves in the tech industry with its innovative approach to search technology. Perplexity uses artificial intelligence to power a next-generation search engine that responds to user queries with concise answers and annotations, rather than traditional lists of links. This AI-driven approach represents a significant departure from conventional search engines and has positioned Perplexity as a potential disruptor in the search market.
Wedbush analyst Dan Ives predicts that Perplexity’s bid is just the beginning. “We now expect a slew of TikTok bids to come over the coming weeks from a host of larger tech players, private-equity, and other strategic names for this key social media platform,” Ives wrote in a note to investors. The potential acquisition of TikTok’s US operations has attracted significant interest from various quarters, with multiple parties expected to submit competing bids in the coming weeks.
Key Quotes
We now expect a slew of TikTok bids to come over the coming weeks from a host of larger tech players, private-equity, and other strategic names for this key social media platform
Wedbush analyst Dan Ives wrote this in a note to investors, suggesting that Perplexity’s bid will likely trigger a competitive bidding war for TikTok’s valuable US operations, with multiple tech companies and private equity firms expected to submit offers.
Our Take
Perplexity’s bid for TikTok represents an extraordinarily bold move that could redefine what’s possible for AI startups. While the valuation gap appears insurmountable at first glance, the involvement of institutional investors and tech giants like Nvidia and SoftBank suggests this is more than just an ambitious long shot. This bid reflects a broader trend of AI companies seeking distribution channels for their technology rather than building audiences from scratch. If successful, Perplexity could leapfrog competitors by integrating its AI search capabilities into TikTok’s recommendation engine and content discovery systems, potentially creating an entirely new category of AI-enhanced social media. However, the deal faces significant regulatory, financial, and technical hurdles. The real story here may be how AI startups are increasingly positioning themselves as acquirers rather than acquisition targets, signaling a maturation of the AI industry and its growing influence across the tech landscape.
Why This Matters
This development represents a pivotal moment in the AI industry’s expansion into social media and highlights how AI companies are positioning themselves as major players in the broader tech ecosystem. Perplexity’s audacious bid demonstrates the growing confidence and ambition of AI startups, even when facing seemingly insurmountable valuation gaps.
The merger could fundamentally reshape both the search and social media landscapes, potentially integrating AI-powered search capabilities directly into one of the world’s most popular social platforms. With TikTok’s massive user base and Perplexity’s advanced AI technology, such a combination could accelerate the adoption of AI-driven content discovery and recommendation systems.
For the AI industry, this bid signals that AI companies are no longer content to remain niche players but are actively seeking to acquire or merge with established platforms to scale their technology. The involvement of major AI investors like Nvidia and SoftBank underscores the strategic importance of this potential deal. If successful, it could trigger a wave of similar acquisitions as AI companies seek established platforms to deploy their technology at scale, fundamentally altering competitive dynamics in both social media and AI sectors.
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Source: https://www.businessinsider.com/perplexity-bid-to-buy-tiktok-2025-1