Baidu’s $3.6 Billion Joyy Deal Collapses, Dealing a Setback to Live Streaming Expansion Plans
Chinese tech giant Baidu faces a setback in its ambitions to expand its live streaming business in China and diversify revenue streams as it calls off a planned $3.6 billion acquisition with Joyy (YY), the Nasdaq-listed owner of the popular live streaming platform YY Live.
On Monday, Baidu announced the termination of the 2020 agreement with Joyy, citing unmet conditions by the December 31 deadline, which included the failure to obtain necessary regulatory approvals. In a filing with the Hong Kong Stock Exchange, Baidu revealed that an affiliate company was responsible for ending the deal.
Joyy responded to the development with a statement, acknowledging the notice from Baidu’s affiliate asserting its right to cancel the transaction. The live streaming company, boasting around 277 million active monthly users globally across several platforms, stated it was seeking legal advice in response to the termination.
Baidu, known as China’s dominant search engine, had initially unveiled plans to acquire YY Live in November 2020, with expectations of closing the deal in the first half of 2021. The move was aimed at expanding revenue sources beyond advertising, propelling Baidu into a leading live streaming platform, as expressed by CEO Robin Li at the time.
Like other live streaming platforms in China, YY Live generates revenue through users purchasing virtual gifts for performers. However, regulatory hurdles and unmet conditions led to the collapse of the anticipated acquisition.
Joyy reported a decline in net revenues to $567.1 million for Q3 2023, down from $586.7 million in the same period the previous year. Live streaming revenues also experienced a nearly 9% decrease to $495.8 million.
The collapse of the deal reflects the challenges faced by tech companies in China, particularly amid regulatory scrutiny. While Chinese authorities have previously targeted powerful tech companies, recent signs suggest a potential easing of the crackdown, emphasizing the role of tech firms in the country’s economy as economic conditions evolve.
