Tech giant Baidu faces trouble after billion-dollar deal collapses

Baidu's efforts to expand its live streaming business in China and diversify its revenue streams have suffered a blow with the collapse of a planned $3.6 billion acquisition.

One of the Chinese tech giant's affiliates has terminated a deal reached in 2020 with Joyy, owner of the popular Chinese live streaming platform YY Live, which is listed on the US Nasdaq.

In a filing to the Hong Kong Stock Exchange on January 1, Baidu said the deal fell through because the two parties failed to meet certain conditions by the deadline of December 31, 2023. Among them was the failure to obtain regulatory approval for the deal.

In a statement the same day, Joyy said it had received a notice of cancellation from Baidu's affiliate.

Joyy currently owns several streaming platforms and has around 277 million monthly active users globally.

Earlier in November 2020, Baidu - the search engine that dominates China's Internet market - announced its agreement to buy YY Live in an effort to increase revenue from sources other than advertising. The parties expect the deal to close in the first half of 2021.

At the time, Baidu CEO Robin Li said the deal would make Baidu the leading live streaming platform and diversify its revenue sources in China.

Like other live streaming platforms in China, YY Live makes money from users buying virtual gifts for performers.

Joyy reported net revenue of $567.1 million in the third quarter of 2023, down from $586.7 million in the same period of 2022. Live streaming revenue fell nearly 9% to $495.8 million.

Since late 2020, the Chinese government has begun to clamp down on companies it considers too influential, focusing especially on the group of technology "giants" (or Big Tech).

But as the economic outlook worsens, the Chinese government has shown signs of easing sanctions, often highlighting the role of technology companies in the economy.