Baidu’s Live-Streaming Hopes Hit by Lapse of $3.6 Billion Deal to Buy JOYY’s
The $3.6 billion agreement to purchase Joyy Inc.’s live-streaming company, YY Live, has expired, which is a major blow to Baidu Inc.’s ambitious entry into the live-streaming market. The agreement, which was announced in November 2020 to expand Baidu’s content offerings and diversify revenue sources, has expired due to difficulties in gaining regulatory permits.
The deal’s collapse was verified in a filing on Monday, which blamed the termination on the inability to get the required regulatory clearances by December 31. The agreement, which was started three years ago, was supposed to be completed in the first half of 2021. Due to unfulfilled terms, Baidu’s affiliate Moon SPV legally cancelled the share purchase agreement. This is a serious blow to Baidu’s aspirations to compete with emerging players in the online entertainment market, such as ByteDance Ltd.
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The purpose of Baidu’s calculated acquisition of Joyy’s live-streaming company was to improve its content portfolio. But because generative artificial intelligence has taken centre stage in the quickly changing tech world, Baidu’s foray into the live-streaming market will undoubtedly be difficult.
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A further layer of uncertainty was introduced when Joyy said in a separate announcement that it intended to consult with legal counsel and look at alternatives for concluding its agreement with Baidu.
Joyy, a leader in Chinese live-streaming, has a sizable user base, 1.61 million paying customers worldwide are drawn to its networks for sharing films and live-streaming games. China’s regulatory landscape has become more stringent, meanwhile, with officials closely examining multibillion-dollar transactions due to worries about the fast rise of the private sector and power consolidation.
Under the direction of President Xi Jinping, the Chinese government has been tackling problems associated with gaming addiction, enforcing regulations for minors in online entertainment, and halting the clearance process for new game titles. In light of this, regulators probably exercised caution while authorising Baidu’s agreement with Joyy.
Although Beijing appears to be loosening its restrictions on the internet sector in an effort to boost economic growth, Baidu’s recent failure highlights the difficulties encountered by digital behemoths looking to thrive in an environment where regulations are still stringent and discriminating.
With this development, Baidu has more obstacles to overcome in its quest for supremacy in the fast-paced and fiercely competitive online entertainment market.
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