At the beginning of the new year, Baidu announced that it had stopped a large acquisition of more than 20 billion yuan.。

Baidu Announces Termination of YY Live Acquisition Agreement

On January 1, Baidu announced that the company would terminate its relationship with JOYY Inc..(hereinafter referred to as "Happy Group") share purchase and sale agreement.。

Baidu said in the announcement that one of its affiliates, Moon SPV Limited, terminated the Share Purchase Agreement entered into by Moon SPV Limited, Baidu (Hong Kong) Limited, Huanju Group and other related parties on November 16, 2020 by exercising their contractual rights.。

According to the above agreement, Baidu (Hong Kong) Limited agreed to purchase its domestic video entertainment live broadcast business in China (i.e. YY Live) from Huanju Group.。The agreement provides that the delivery of the proposed acquisition is subject to certain prerequisites, including obtaining the necessary government regulatory approvals and other conditions, and that either the buyer or the seller has the right to terminate the share purchase agreement if the proposed acquisition is not delivered by the final cut-off date.。As of December 31, 2023, the final cut-off date, the delivery prerequisites under the share purchase agreement have not been fully met.。

Baidu further said that the company will seek to discuss with Huanju Group the next step after the termination of the share purchase agreement。

After Baidu's announcement, on the evening of January 1, Huanju Group responded that it had been notified by Baidu affiliates to terminate the November 2020 share purchase agreement.。Huanju Group said the sale of YY Live to Baidu was largely completed on February 8, 2021, and certain matters remain to be completed in the future, but Baidu claimed in the notice that it had exercised its right to terminate the share purchase agreement to cancel the transaction。In response, Huanju Group is seeking legal advice and will consider all options it can take in response to Baidu's notice.。

Happy Gathering Has Been Shorted by Muddy Waters

This acquisition agreement between Baidu and Huanju Group began in 2020.。According to the agreement signed at the time, Baidu will acquire Huanju Group's domestic video entertainment live broadcast revenue in China in the form of a cash acquisition.。The acquired live broadcast business includes YY Mobile App, YY.com website and YY PC etc。In addition, after the completion of the delivery, YY client will be retained, content and technology simultaneously provided to Baidu, China's domestic live team is also taken over by Baidu。At that time, Huanju Group mentioned in the announcement that the transaction is expected to be completed in the first half of 2021.。

The total amount of the transaction is $3.6 billion, which translates into approximately RMB 25.6 billion, and the scale of the amount involved is one of the largest in Baidu's historical acquisition cases.。

For the deal, Li Xueling, then chairman and CEO of Huanju Group, said the deal will enable YY Live to gain access to Baidu's massive user traffic, promote its business growth, and enhance the liquidity of its ecosystem, thereby unlocking greater value in a larger ecosystem.。

It is worth noting that three days after Baidu announced the acquisition of YY Live, Huanju Group was shorted by the famous shorting agency - Muddy Water.。Muddy Waters issued a detailed report at the time that Huanju Group had financial fraud。Subsequently, Happy Gathering issued a statement refuting。

Huanju Group says Muddy Waters report shows its lack of basic understanding of China's live streaming industry。At the same time, in order to refute the false allegations in the report about the authenticity of Huanju Group's profit data, the company is willing to have cash verification and due diligence conducted by competent third-party consultants.。

Baidu wants to give up live track？

At present, Baidu's acquisition of YY Live has entered the later stages of the transaction, but Baidu still chooses to give up, of which the inside story is unknown to the outside world.。But from the changes in the external environment, you can simply guess why Baidu did so.。

First of all, it is related to the "live broadcast attribute" of YY live broadcast.。It is understood that YY Live is a national entertainment live broadcast platform including music, technology, outdoor, sports, games and other content.。

Although YY live broadcast platform covers a wide range of content, "money road" is very wide, but in the most important live category - e-commerce live broadcast, is not a big platform。

In recent years, due to the fast realization, e-commerce live broadcast has gradually become the mainstream of live broadcast.。According to iiMedia Research, the total size of China's live e-commerce industry is expected to reach 2,137.3 billion yuan by 2025.。According to analysts of AI Media Consulting, with the development of Internet technology, the KOL model, represented by live streaming, brings consumers a more intuitive and vivid shopping experience, with high conversion rate and good marketing effect, gradually becoming a new growth driver for e-commerce platforms and content platforms.。

Secondly, Baidu's platform attributes make it more difficult for it to move closer to the most profitable e-commerce live broadcast.。Other e-commerce platforms such as Taobao and Pinduoduo have their own shopping attributes, so it is very handy to develop live e-commerce; short video platforms such as Douyin and Kuaishou also have natural advantages in directing traffic to live broadcasts.。In contrast, although Baidu has a lot of traffic (mostly driven by its search engine), it is not easy to direct this traffic to live broadcasts。

In addition, Baidu is not only late in the live broadcast, but also not very attentive, which is related to Baidu's strategic focus adjustment。In the past two years, Baidu has devoted itself to AI, especially the AI craze in 2022, which has strengthened Baidu's determination to devote itself to artificial intelligence.。And Baidu is currently in AI, there are many achievements。Wen Xin Yiyan is one of the top intelligent chatbots in China, and its self-driving open platform Apollo has been in the global self-driving "leader" camp for many years, and is the only Chinese player on the "leader" list.。

In August 2023, the "Automotive Robot Strategic Cooperation Project" jointly created by Geely Holding Group and Baidu Group ushered in important progress.。In the "extreme," Baidu retreated from the "leader" to the "technology provider."。This action is somewhat similar to the abandonment of the acquisition of YY Live, both of which can be seen as one of the actions of Baidu's strategic focus adjustment.。

In addition, abandoning projects such as car building and live broadcasting could also allow Baidu to focus its funds on AI-related projects.。The amount involved in the acquisition of YY Live is approximately RMB 25.6 billion, which is a significant amount for Baidu.。According to Baidu's third-quarter results, as of September 30, 2023, Baidu's cash, cash equivalents, restricted funds and short-term investments were $202.7 billion and free cash flow was $6 billion.。The money for the acquisition of YY Live is worth Baidu's free cash flow for a year, and Baidu's abandonment of YY Live has become "excusable."。

And compared to the highly competitive live broadcast industry, AI currently looks more like a "sunrise industry," Baidu is very optimistic about the potential of AI。On November 1, 2023, Baidu officially launched Wenxin Yiyan Professional Edition, priced at 59.9 yuan / month, continuous monthly discount price 49.9 yuan / month。Wen Xin Yiyan Becomes the First AI Intelligent Chat Robot to Touch Commercialization in China。Baidu Chairman and CEO Robin Li said at the third quarter earnings call that he believes AI chatbots can work well with GM AI's new search and bring more opportunities to Baidu, which is expected to reach hundreds of millions of yuan in revenue this quarter and is certainly growing at a very fast pace, a trend that should continue and be further strengthened in 2024.。