Credit：Visual China

Baidu’s affiliate Moon SPV Ltd has exercised rights under contracts to terminate the shares purchase agreement originally signed with JOYY and other related parties on November 16 2020 with the subsequent revisions or supplementary,citing conditions of closing the deal have not been fully satisfied as of the end of 2023, according to a filling with the Hong Kong Stock Exchange last week. Under the agreement, either the buyer or the seller has the right to call off it if conditions, including obtaining necessary regulatory approvals from governmental authorities, are not met and the acquisition does not conclude by December 31 2023, Baidu said.

JOYY then said it received notification about Baidu’s termination and it is seeking legal advice and will consider all the available options as response to Baidu’s move. The Chinese video-based social media platform pointed out sales of YY Live has been basically completed on February 8, 2021 with certain matters pending for resolved.   

The deal about YY Live first made public in 2020 November. Baidu at that time announced it had entered into definitive agreements with JOYY to acquire YY Live, includes YY mobile app, YY.com website and PC YY, among others, for an aggregate purchase price of approximately US$3.6 billion in cash, subject to certain adjustments. Baidu co-founder and CEO Robin Li expected the transaction will catapult Baidu into a leading platform for live streaming and diversify our revenue source. “YY Live comes to Baidu bringing great synergy. YY Live stands to benefit from Baidu's large traffic and thriving mobile ecosystem, while Baidu will receive immediate operational experience and knowhow for large-scale video-based social media development, as well as an enviable creator network that will further strengthen Baidu's massive content provider network. Together with the team from YY Live, Baidu hopes to explore the next-generation live-streaming and video-based social media that can expand beyond entertainment into the diversified verticals on Baidu platform," the chief executive said upon announcement of the deal in 2020.

Previous reports has suggested Baidu has difficulties in obtaining regulatory approval for the deal. China's antitrust regulator was unlikely to approve Baidu’s takeover as Beijing moved to rein video game-related live-streaming business and corporate expansion via deals, Reuters cited sources in September 2021.

Baidu’s cancellation is not a big surprise for analysts and industry observers since the Chinese search engine giant has refocused on generative artificial intelligence (AI) these years. This move was "not totally unexpected, given investors have been waiting for more details in past years", Jefferies equity analysts Thomas Chong and Zoey Zong said in a note following Baidu’s latest announcement. They noted Baidu’s ChatGPT rival Ernie Bot has already achieved a milestone in user base and [helps] reconstruct all of the company's products with AI.

Baidu may still have the interest in live-streaming but its goal has become different from that three years ago.  While Baidu is highly likely to serve as operator of YY Live in the futureJOYY’s operation focus has shifted to overseas and it is very unlikely not to adjust it back to the domestic live-streaming business, Beijing Business Today quoted Li Jinqing, analyst at Chinese IT industry consulting firm BigData-Research. Li noted that what Baidu really wants to pursue for live-streaming could be technologies and talents, instead of taking over any individual brand.

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