What Is Perplexity AI, the Startup Behind the Proposed TikTok Merger?

The U.S. Supreme Court has upheld a federal ban on TikTok unless ByteDance divests its U.S. assets, setting a deadline of January 19 for the app to be removed from app stores; otherwise, each user could face a $5,000 fine, a penalty untenable for ByteDance, Apple, or Google given TikTok's 170 million U.S. users.

On the same day, AI startup Perplexity AI submitted a proposal to create a new entity that would merge Perplexity with TikTok's U.S. business, allowing existing shareholders to retain equity and inviting additional investors.

Perplexity AI, founded in 2022 in San Francisco, is valued at $9 billion. Its founding team includes engineers with deep AI experience, such as Aravind Srinivas (formerly at OpenAI and Google Brain) and Denis Yarats (formerly a research scientist at Meta). The company’s mission is to make knowledge acquisition simpler and more efficient.

The core product is a generative‑AI “answer engine” built on Retrieval‑Augmented Generation (RAG) technology, which blends natural‑language processing and machine learning to generate direct answers rather than traditional search‑result links. Key features include real‑time web search, transparent citations for each answer, and a conversational interface that feels like a chatbot but with higher accuracy.

Since its launch, Perplexity AI has shown rapid market traction: by February 2023 its monthly visits reached 10 million with 2 million unique visitors. In 2024 the company completed multiple financing rounds, lifting its valuation from $2.5 billion to $9 billion. Subscription revenue grew from $5 million in January 2024 to $35 million by August 2024.

Industry observers label Perplexity AI as the “Google of AI,” noting that its product combines the conversational strengths of OpenAI’s ChatGPT with the search capabilities of Google, and competes with established players such as Google Search, Microsoft Bing, and domestic rivals like DeepSeek. Despite this competition, its distinctive technology and user experience have secured a notable market position.

If the merger succeeds, the resulting entity would blend AI‑driven search with TikTok’s short‑video social platform, potentially creating new competitive pressure on tech giants such as Google and Meta.