(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' 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 and Google that they will not face enforcement actions when a ban takes effect.