TikTok Perplexity AI Merger: Impact on TikTok’s Future in the US
Written by Jack Butler, Head of Paid Media, with insights from Alex Velinov, Chief Technology Officer.
As of January 20, 2025, TikTok’s future in the United States is uncertain. ByteDance failed to meet the divestiture deadline.
However, a surprising merger proposal from Perplexity AI could offer a solution. It might allow TikTok to stay operational while addressing key regulatory challenges.
Understanding the Current Situation
The Protecting Americans from Foreign Adversary Controlled Applications Act, signed into law in April 2024, required ByteDance to sell TikTok’s U.S. assets by January 19, 2025, to avoid a nationwide ban.
With the deadline now passed, TikTok’s future remains unclear.
On January 18, 2025, TikTok was temporarily removed from U.S. app stores. It was unavailable for about 18 hours before being reinstated on January 19, 2025, following a temporary reprieve.
A surprising twist came when Perplexity AI submitted its TikTok merger proposal just one day before the shutdown deadline. This proposal could help keep TikTok operational while addressing regulatory concerns.
Could Perplexity Merger Be the Hero TikTok Needs to Stay in the USA?
Alex Velinov, our Chief Technology Officer, provided insight on this unexpected TikTok merger proposal.
- The Proposal: Perplexity AI has proposed merging its operations with TikTok’s U.S. division. New Capital Partners would help form a new entity.
- Investor Retention: Unlike an outright sale, this structure would allow most of ByteDance’s existing investors to retain their equity stakes.
- Strategic Benefits: The merger could enhance Perplexity’s AI-powered search platform by adding TikTok’s vast video content.
- Valuation: Sources estimate the combined entity could be worth well over $50 billion.
- Timing and Regulatory Hurdles: Though the bid was made at the last minute, the deal faces heavy regulatory scrutiny. It could take months to finalise.
- Potential Reprieve: President-elect Donald Trump has signaled his willingness to grant TikTok a 90-day extension. This would buy time for further negotiations.
This TikTok merger proposal could provide an innovative solution to the platform’s regulatory and operational challenges. It may reshape the tech landscape by combining AI-driven search with algorithmic video platforms.
Implications for Brands and Marketers
Regardless of the outcome, TikTok’s influence on content engagement is undeniable. The platform’s algorithm-driven “For You” pages have set the standard for other platforms. This emphasizes hyper-targeted content delivery.
TikTok has become a crucial tool for reaching younger demographics, with over 150 million monthly active U.S. users. Even if the platform disappears, the change in content consumption is here to stay.
Algorithmic targeting is now the most effective method for reaching users with paid media. Pandora’s box has been opened!
If the merger proceeds, marketers may need to adjust strategies to incorporate Perplexity’s search-driven platform along with TikTok’s entertainment-focused content.
If TikTok ceases operations in the U.S., diversification across other platforms will be crucial. This will help marketers reach younger demographics effectively.
Staying Informed and Agile
The digital marketing landscape is ever-changing, with platforms evolving and regulations shifting. Staying updated on policy developments and platform-specific news is key.
Regularly reviewing and adjusting your marketing strategies will ensure resilience and continued growth, regardless of external changes.
Conclusion
The proposed TikTok merger with Perplexity AI could mark a new era for digital marketing. It would blend video content with AI-powered search. However, uncertainty about regulatory approval and platform availability highlights the importance of diversifying your marketing approach.
Diversification reduces risk. We always recommend adding new platforms to your mix. This not only attracts new users but also helps you prepare for changes in the media landscape.