Baidu’s bid to expand its live streaming business in China and diversify its revenue has suffered a blow with the collapse of a planned $3.6 billion acquisition.
The Chinese tech giant announced Monday that one of its affiliate companies had terminated a 2020 agreement with Nasdaq-listed Joyy (YY), the owner of popular live streaming platform YY Live.
The deal fell through because certain conditions had not been met by the final deadline of December 31, Baidu (BIDU) said in a Monday filing with the Hong Kong Stock Exchange, including obtaining the “necessary regulatory approvals.”
Joyy said in a statement that it had received a notice from Baidu’s affiliate on Monday asserting its right to “effectively cancel the transaction.” The live streaming company, which owns several platforms and has about 277 million active monthly users globally, said it was seeking legal advice.
Baidu, China’s dominant search engine, announced in November 2020 that it had agreed to buy YY Live in an attempt to grow its revenues from sources other than advertising, and that it expected the deal to close in the first half of 2021.
Baidu CEO Robin Li said at the time that the acquisition would “catapult Baidu into a leading platform for live streaming and diversify our revenue source.”
Like other live streaming platforms in China, YY Live makes money from users who buy virtual gifts for performers.
Joyy reported net revenues of $567.1 million for the third quarter of 2023, down from $586.7 million in the same period the previous year. Live streaming revenues fell by nearly 9% to $495.8 million.
In late 2020, Chinese authorities started clamping down on what it saw as overly powerful companies, with a particular focus on Big Tech. But as China’s economic outlook deteriorates, Beijing has shown signs of easing the crackdown, frequently talking up tech companies’ role in the economy.
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