Baidu’s ambitious plan to grow its live streaming business in China and diversify its income stream took a hit with the collapse of a planned $3.6 billion acquisition.
The leading Chinese tech company announced on Monday that one of its affiliated entities had terminated a 2020 agreement with Joyy, a Nasdaq-listed company and the owner of popular live streaming platform, YY Live.
The deal was nullified because certain conditions were not fulfilled by the final deadline of December 31st, Baidu reported in a filing with the Hong Kong Stock Exchange on Monday. These conditions included acquiring the essential regulatory approvals.
Joyy, on receiving a notice from Baidu’s affiliate indicating their right to cancel the transaction, announced that it was seeking legal advice. The live streaming company, boasting several platforms and approximately 277 million active monthly users worldwide, expressed its disappointment over the situation.
Back in November 2020, Baidu, the dominant search engine in China, announced its agreement to acquire YY Live. The move aimed at diversifying Baidu’s revenue streams beyond advertising, expecting the deal to close in the first half of 2021.
Robin Li, Baidu’s CEO, claimed at that time that the acquisition would transform Baidu into a leading live streaming platform and diversify its revenue source. Much like other live streaming platforms in China, YY Live generates revenue from users purchasing virtual gifts for performers.
However, Joyy reported a drop in its net revenues, recording $567.1 million for the third quarter of 2023 compared to $586.7 million during the same period the previous year. The live streaming revenues also decreased by almost 9% to $495.8 million.
Towards the end of 2020, Chinese authorities started tightening restrictions on companies perceived as overly powerful, mainly concentrating on Big Tech. Yet, in the face of a deteriorating economic outlook in China, Beijing appears to be relaxing the crackdown, stressing the significant role tech companies play in the country’s economy.
