Beijing (PingWest)—Chinese search engine giant Baidu today announced it will acquire live streaming company Joyy's domestic business for approximately USD3.6 billion in cash.

According to the agreement between the two parties, Joyy's domestic business including YY mobile app, YY.com website, and PC YY, will be sold to Baidu. The closing of the transaction is subject to certain conditions and is currently expected to occur in the first half of 2021.

Explain the rationale behind the decision making, Baidu management said it expects the acquisition of YY Live, JOYY's China business, to help further develop its mobile ecosystem and non-advertising revenue, fending off rivals that are rapidly expanding their own video-based businesses.

"This transaction will catapult Baidu into a leading platform for live streaming and diversify our revenue source," said Robin Li, Co-Founder, and CEO of Baidu. "Adding YY Live to our portfolio will allow Baidu to gain immediate operational experience and know-how on building a large live video community. 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 announcement of buying YY Live came as Baidu reported better-than-expected earning for the third quarter ended September 30,2020. 

In the third quarter, Baidu booked a 1% rise in quarterly revenue, beating market estimates. The company’s third quarter revenue was contributed mainly by advertising sales on its core search platform. Advertising spending declined earlier this year during Covid-19 lockdowns but it has bounced back from the low point as enterprise advertising spending to gradually pick up. 

Launched in 2015 by Nasdaq-listed JOYY,  YY Live  had 41 million monthly active users in China as of September. Despite its early start in livestreaming, YY's growth has slowed in recent years and it has lost customers to rivals including ByteDance's Douyin and Tencent-backed Kuaishou. 

Headquartered in Guangzhou, Joyy's business is mainly comprised of two parts: YY, a hybrid of voice, live streaming, short video entertainment, game, and education businesses, etc. in the domestic market, and Bigo for the global markets.