The artificial intelligence (AI) startup 'Purplecity AI' proposed a merger with TikTok's U.S. subsidiary.
On the 18th (local time), economic media CNBC reported that Purplecity submitted a proposal to its parent company ByteDance to establish a new corporation through a merger with TikTok's U.S. subsidiary and investment firm New Capital Partners.
The proposal stated that most of ByteDance's existing investors would be able to retain their equity through the new structure, and that the AI startup would be able to receive more video content.
Purplecity is an AI search engine startup competing with OpenAI, the developer of ChatGPT, and Google. Amid the boom in generative AI, its corporate value reached about $9 billion (approximately 13.1 trillion won) at the end of last year.
Meanwhile, under the 'TikTok ban law,' ByteDance faces a prohibition on new downloads in the U.S. starting on the 19th unless it sells TikTok's U.S. operations to an American company. ByteDance has publicly indicated it will not sell TikTok's U.S. subsidiary, but Purplecity's proposal is for a merger, not a sale.
As the transaction between this startup and ByteDance is expected to take several months to finalize, the transaction size is anticipated to reach $50 billion (72 trillion won). The final size will depend on which existing shareholders of ByteDance participate in the new corporation and who will rearrange their equity, sources explained.
TikTok plans to fully cease services in the U.S. from the 19th, as a request for a temporary injunction to halt the enforcement of the 'TikTok ban law' was rejected by the federal Supreme Court following a lower court ruling. President-elect Donald Trump noted in an NBC interview that "the likelihood of a '90-day extension' for the sale deadline stated in the TikTok ban law is the highest," and he said it would likely be announced on Monday (the 20th) when the inauguration takes place.