Baidu’s move to cancel YY Live acquisition amid fierce market competition, tougher regulation a boon to firm’s AI business expansion, analysts say

Baidu’s decision to terminate its acquisition of social media firm Joyy’s live-streaming business shows the internet search giant’s sharpened focus on artificial intelligence (AI) development initiatives, according to analysts, as Chinese companies race to cash in on the technology and help boost the country’s economic recovery.

In a Hong Kong stock exchange filing on Monday, Baidu said its affiliate Moon SPV exercised the right to terminate the US$3.6 billion acquisition of YY Live from Singapore-based Joyy because the deal lapsed, as it failed to meet certain conditions that include obtaining the necessary regulatory approvals from government authorities as of December 31.

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 research note on Monday following Baidu’s announcement. They indicated that China’s internet sector “has been undergoing changes”, which reflects Baidu’s focus on generative AI.