Jan 18 (Reuters) - Perplexity AI asked TikTok's Chinese

parent company, ByteDance, on Saturday to allow the U.S. search

engine startup to merge with TikTok U.S. and create a new entity

combining them and New Capital Partners, CNBC reported.

TikTok faces a U.S. ban starting on Sunday if it does not

cut ties with ByteDance, although President-elect Donald Trump

said on Saturday he would likely give the short-video

social-media platform a 90-day reprieve on Monday.

The new structure proposed by Perplexity would allow for

most of ByteDance's existing investors to retain their equity

stakes and would bring more video to Perplexity, the report

said, citing an unnamed source familiar with the situation.

Perplexity AI and TikTok did not immediately respond to

requests for comment. New Capital Partners could not be

immediately reached.

Perplexity AI believes its bid may succeed since the

proposal is a merger rather than a sale, the report added.

Perplexity AI's search tools enable users to get fast

answers to questions, with sources and citations. It is powered

by large language models that can sum up and generate

information, from OpenAI to Meta Platforms' ( META ) open-source

model Llama.

TikTok, which has captivated nearly half of all Americans,

powered small businesses and shaped online culture, said on

Friday it will go dark in the U.S. on Sunday unless President

Joe Biden's administration provides assurances to companies such

as Apple ( AAPL ) and Google that they will not face

enforcement actions when a ban takes effect.