Sources, Telecommunications News, ET Telecom


By Julie Zhu

HONG KONG: Chinese antitrust agency Baidu’s $ 3.6 billion acquisition of video-based domestic live streaming business YY Live from JOYY Inc.

This follows Beijing’s move to curb game-related deals and corporate expansion through deals, they said.

The Baidu JOYY deal would be the latest multi-billion dollar deal to stumble amid China’s widespread crackdown on private companies, particularly in the internet sector, as Beijing seeks to control big data and dismantle monopoly practices.

A failure of the Baidu deal could cast a shadow over a separate planned transaction to take private the Nasdaq-listed JOYY, which would have valued it at up to $ 8 billion, the sources said and two others were familiar with the matter Sources.

Chinese search engine giant Baidu announced in November that it would buy YY Live from social media company JOYY and pay cash to diversify its revenue stream.

When asked by Reuters, Baidu said it had not received any news from Chinese regulators that the deal was unlikely to be approved.

The State Administration for Market Regulation (SAMR) – China’s antitrust authority – and JOYY did not respond to requests for comments.

The deal was awaiting approval from SAMR for final closing. JOYY should receive the remaining proceeds of approximately $ 1.6 billion from Baidu after regulatory approval.

SAMR said in a report in early September that it is conducting anti-monopoly reviews of 11 transactions, including Baidu’s acquisition of YY Live.

However, one of the sources familiar with the regulator’s mindset said that SAMR is unlikely to give a green light as it could allow Baidu to acquire and further invest in a live streaming video game-related business, while the recent crackdown on the gaming industry sent the wrong message to the market.

Another source, also familiar with the situation, said SAMR had already communicated its stance to at least one of the contracting parties, adding that the approval process will likely drag on until the application expires.

“SAMR hopes the companies can withdraw the application,” the source said.


Beijing has raised concerns about the impact of video games on the country’s minors and last month introduced new rules that limit the amount of time children under the age of 18 can spend playing video games.

It has also criticized the entertainment industry for “polluting” society and youth, and recently released new guidelines on the behavior of artists and live streamers.

Two months ago, SAMR formally blocked Tencent Holdings’ $ 5.3 billion plan to merge the country’s two leading video game streaming sites, Hula and DouYu, on antitrust grounds.

A failure of the Baidu JOYY deal would be a blow to JOYY’s two largest shareholders, Chairman David Li and Xiaomi founder Lei Jun, as the dynamics of their plan to make JOYY private would change completely, according to the sources.

They teamed up for the deal because they believe the Chinese social media company is undervalued in the US market, Reuters reported last month.

Li did not respond to a request through JOYY for comment. Lei also did not respond to a request for comment.

JOYY was founded in 2005 and went public in 2012. It also operates the Singapore-based live streaming platform Bigo Live and has a 16 percent stake in Huya.

YY Live relies heavily on games and entertainment content for its revenue and user traffic. The average monthly mobile active users hit 42 million in the fourth quarter of 2020, up 1.9% year over year, according to the parent company’s 2020 annual report.

However, paying users fell 1.1% over the same period, which JOYY attributed to the impact of COVID-19 on people’s spending.


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