According to CNBC, Perplexity AI officially shortlisted TikTok on Saturday and submitted an acquisition offer to its parent company ByteDance, hoping to create a new entity formed by the merger of Perplexity, TikTok US and New Capital Partners.

The new structure will allow most of ByteDance’s existing investors to retain their stakes and will bring more videos to Perplexity, according to a person familiar with the matter. The source asked to remain anonymous due to the confidentiality of the potential deal.

Perplexity AI, an artificial intelligence search engine startup, competes with OpenAI GoogleThe company was valued at about $500 million at the start of 2024 and at about $9 billion at the end of the year, attracting growing investor interest amid a boom in artificial intelligence and controversy over plagiarism accusations.

AI-assisted search is seen by investors as one of Google's key risks because it could change how consumers get information online. Last year, OpenAI launched a search engine called SearchGPT, and the company kicked off the generative AI boom with ChatGPT at the end of 2022. Google later rolled out "AI Overviews" in search, allowing users to see a quick summary of answers at the top of results.

While any potential deal between Perplexity AI and ByteDance could take months to close, TikTok said the app would be "delisted" in the U.S. on Sunday unless the Biden administration guarantees no penalties. appleGoogle and other service providers to host it — President-elect Donald Trump told NBC News on Saturday that he would "probably" give TikTok another 90 days to reach a deal after he is sworn in on Monday.

In a video posted to TikTok on Friday, CEO Shou Zi Chew said: "I want to thank President Trump for his commitment to working with us to find solutions that will keep TikTok available in the United States."

Sources told CNBC that ByteDance has publicly hinted that it will not sell TikTok US, which is part of the reason Perplexity AI believes it has a chance to make a bid because the proposal is a merger rather than a sale.

Sources believe a reasonable price is "well above $50 billion," but the final figure attached to the proposal will depend in part on which of ByteDance's existing shareholders want to retain a piece of the new entity and which want to cash out.

Correction: Perplexity AI's acquisition of TikTok will create a new combined entity that combines Perplexity, TikTok US and New Capital Partners. A previous version of this article incorrectly described one of the participants.