Chinese internet giant Baidu Inc. has called off a proposed $3.6 billion acquisition of the livestreaming platform provider Joyy Inc.

One of Baidu’s affiliate companies had agreed back in 2020 to acquire the Nasdaq-listed Joyy, which owns the livestreaming platform YY Live, as part of an effort to diversify its revenue away from advertising. However, Reuters reported today that deal collapsed on Dec. 31 when it became clear that “certain conditions” specified in a contractual agreement had not been fulfilled by a final deadline.

Baidu affiliate Moon SPV Ltd. said in a filing with the Hong Kong Stock Exchange that those conditions included “obtaining the necessary regulatory approvals..

Joyy confirmed the termination of the deal in its own regulatory filing, stating that it had received notice from Baidu’s affiliate that asserted its right to “cancel the transaction.” Joyy, which owns several platforms beside its livestreaming entity and boasts 277 million active users globally, added that it’s now seeking legal advice.

Baidu is the most popular search engine in China, and just like Google LLC, it derives much of its revenue from advertising. It announced its plans to acquire Joyy in November 2020, as part of a plan to grow its revenue base. At the time, the company said it hoped that the acquisition would be completed in the first half of 2021.

Baidu’s chief executive Robin Li said back then that the acquisition would help transform his company into a “leading platform for live streaming.”

YY Live is one of the most popular livestreaming platforms in China, and the bulk of its revenue comes from “virtual gifts” that users purchase to give to their favorite content creators.

In the third quarter of 2023, Joyy reported net revenue of $567.1 million, down from the $586.7 million in sales it generated a year earlier. Its livestreaming revenue was down 9% to $495.8 million.

In 2021, Reuters reported that China’s antitrust regulator was concerned about the deal, at a time when the government was attempting to clamp down on overly powerful companies in the technology sector. However, hopes of the deal going ahead were revived recently as Beijing has recently shown signs of easing up on its crackdown.

Photo: Cloud Computing/Flickr