Jeff Bezos-Backed Perplexity Reportedly Makes $50 Billion Move To Merge With TikTok, But Elon Musk's X Remains This Analyst's Favorite Bidder

In a surprising turn of events, Jeff Bezos-backed Perplexity AI has reportedly made a $50 billion bid to merge with TikTok, according to sources familiar with the matter. The proposed deal, which would create a new merged entity combining Perplexity, TikTok U.S., and new capital partners, aims to allow most of ByteDance's current investors to maintain their equity stakes while improving Perplexity's video capabilities. However, Wedbush analyst Dan Ives hinted that Elon Musk's X could ultimately seal the deal amid rising speculation.

Perplexity AI, an artificial intelligence search engine startup, has seen its valuation soar from $500 million to $9 billion in just one year, attracting increasing investor interest amid the generative AI boom. The company's AI-assisted search capabilities could provide a significant competitive advantage over traditional search engines like Google. Meanwhile, TikTok boasts a massive user base of 170 million Americans, offering Perplexity the opportunity to expand its reach and user engagement.

However, the proposed merger faces several challenges. Antitrust concerns may arise, as Perplexity AI and TikTok are both prominent players in their respective markets. The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) may scrutinize the deal to assess potential impacts on competition. Additionally, national security concerns could come into play, as TikTok's Chinese ownership may raise red flags for the Committee on Foreign Investment in the United States (CFIUS). Data privacy concerns may also arise, as TikTok has a vast amount of user data that could be at risk if not properly protected.

Elon Musk's X, on the other hand, has been mentioned as a potential bidder for TikTok. Musk, who already owns X, could potentially integrate TikTok's video content into his social media platform. However, regulatory hurdles may arise due to antitrust concerns, as X is already one of the largest social media platforms in the U.S. Additionally, national security concerns could come into play, as Musk's strong relationship with the Chinese government could be a factor in the review. Data privacy concerns may also arise, similar to those mentioned for the Perplexity AI-TikTok merger.

In conclusion, the proposed merger between Perplexity AI and TikTok faces several challenges, including antitrust concerns, national security concerns, and data privacy concerns. Elon Musk's X remains a potential bidder, but it too faces regulatory hurdles and potential challenges. The outcome of the regulatory reviews will ultimately determine whether either deal goes through or if alternative solutions are pursued.