<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/9be107c5-66d0-40b8-9c6b-eeafa07d1baf.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/9be107c5-66d0-40b8-9c6b-eeafa07d1baf.jpeg"/>Author: Huang YuThree years ago, on Li Yanhong's birthday, Baidu announced its largest acquisition in company history, acquiring YY Live for $3.6 billion.Three years later, on the first day of 2024, Baidu announced the termination of the acquisition of YY Live, citing that certain prerequisites for delivery were not met.The more practical reason is that live streaming is a thing of the past, and Baidu, which is now betting on the booming AI industry, no longer needs YY.This is a rare business acquisition drama.Internet analyst Zhang Shule told Wall Street News that Baidu's decision to abandon the acquisition of YY Live is, in a sense, the result of the ever-changing landscape of the live streaming industry.Let's go back to 2020 when the sudden outbreak of the COVID-19 pandemic greatly accelerated the explosive growth of live streaming e-commerce. Live streaming + short videos became the battleground for internet giants.At that time, the industry competition had entered a state of full competition, and the Matthew effect became more apparent. Douyin, Kuaishou, Taobao, Bilibili, and others were fiercely competing in the field of short videos and live streaming. Tencent's Huya and Douyu dominated the game live streaming market.Baidu, which was falling behind in this field, was surrounded by anxiety caused by short videos and live streaming.Starting with game voice socialization, YY Live rose in the live streaming arena and survived the fierce battle in the entertainment live streaming industry. It caught Baidu's attention.Zhang Shule pointed out that due to the difference in the concept of voice socialization between YY Live and platforms like Douyin and Kuaishou, and the fact that it was the early stage of the global voice socialization trend, Baidu predicted that it could enter the live streaming market through social live streaming and overtake its competitors.However, the market was not optimistic about the alliance between YY Live and Baidu at that time. On the one hand, YY Live had shown signs of fatigue in terms of user scale and revenue growth. On the other hand, Baidu had no other advantages in the live streaming field.But Baidu was determined to win. In 2020, Baidu's Senior Vice President Shen Dou, Senior Vice President Cui Shanshan, and Vice President Cao Xiaodong flew to Guangzhou to negotiate the acquisition with the YY Live team, eventually offering the highest price in Baidu's acquisition history.After the acquisition of YY Live, Li Yanhong once stated in an internal memo that this was Baidu's offensive move after making progress in mobile ecosystem infrastructure construction. It would make Baidu one of China's leading live streaming platforms and take a big step forward in its diversified revenue strategy.It is obvious that Baidu had high hopes for YY Live.Although the delivery of YY Live was hindered in the approval process and has not been completed legally, it has been basically integrated into Baidu's business. On February 8, 2021, Huanju Times, the parent company of YY Live, announced that the transaction of selling YY Live to Baidu had been basically completed.According to Wall Street News, at that time, the members of the YY Live team had already started working together with Baidu and had switched to Baidu's employee badges. By the end of 2021, YY Live and Baidu underwent a large-scale personnel change, and He Junjie, Vice President of Baidu Group and former head of Baidu's strategic investment, took over YY Live and conducted a comprehensive restructuring.This has been interpreted as Baidu becoming the new owner of YY.However, during the three years of acquisition, the cooperation between the two parties did not produce the expected synergistic effect, and Baidu has always failed to establish a presence in the live streaming field.Nowadays, the live streaming industry has undergone significant changes. The market value of Huya has dropped to about 10% of its peak in 2020, the founder of Douyu has been arrested, and the stock price has remained below $1 for several months, facing delisting. Short video platforms such as Douyin and Kuaishou have become the biggest winners in the live streaming industry, while Bilibili and Xiaohongshu are also gaining momentum.As for Huanju Times, the parent company of YY Live, as of the close of December 29, 2023, its stock price has fallen to $39.7 per share. The $3.6 billion acquisition price offered by Baidu is now 1.5 times the total market value of Huanju Times.Zhang Shule believes that it has become a realistic choice for Baidu to terminate the acquisition of YY Live, and it has the determination to cut off even if it means facing disputes.Compared to the stagnant live streaming business, Baidu has now invested more energy into the AI battlefield, with products such as Wenxin Yiyuan and intelligent driving becoming the focus of its business.Gao Dongxu, Chief Analyst of China Entertainment Think Tank, told Wall Street News that terminating the acquisition of YY Live actually saves Baidu's cash flow and allows it to focus its core energy and funds on innovative businesses such as Wenxin Yiyuan, in order to compete for new high grounds.In the live streaming battlefield, Baidu has retreated from the front line, but it will definitely not be content to remain silent in this popular race track. In the future, it may rely on its own AI service system to become a service provider for the live streaming business and create new business growth points.Compared to Baidu, YY Live and Huanju Times are more affected in this &#34;annual&#34; breakup drama. They not only have to return the $3.6 billion they received, but also face sustainable development issues.Zhang Shule believes that the termination of the acquisition by Baidu will inevitably lead YY Live into structural chaos, especially since it has made all the personnel and structural preparations for the merger in the past three years. The sudden termination may pose problems for the continuity of YY Live's future development.YY Live's response also reflects its desire to complete the acquisition or at least obtain compensation, in order to have the ability to survive this chaotic period. On the evening of January 1st, Huanju Group issued a statement stating that it is seeking legal advice and will consider all options it can take against Baidu.The $3.6 billion acquisition of YY Live, this grand live streaming overtime game initiated by Baidu, is now being brought to a close by Baidu itself. YY Live may end up in a mess, but there is nothing that can be done about it.Such stories are not new to Baidu and other internet giants. In fact, in the past year, Baidu has been optimizing its organization, reducing costs and increasing efficiency. Many new business departments have either downsized or been shut down, such as Baidu Games, intelligent driving, and metaverse.Other giants, such as Douyin, have also downsized their AR and gaming businesses in 2023, and Alibaba is currently slimming down and selling off assets.Almost every industry has entered a new cycle. The stories of lavish spending and extravagance during the golden age are destined to fade away in the winds of history.

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