As the market value gap with Alibaba and Tencent grows, Baidu needs more innovative business sectors to regain confidence in the capital market.
According to Chinese media, Baidu's negotiation to acquire YY.com's domestic business is close to completion. YY.com's overseas business is not within the transaction and continues to operate independently. YY.com declined to comment.
YY.com is a major Chinese video-based social network, a subsidiary of JOYY. JOYY Inc., formerly YY Inc., is a social platform that engages users in real-time online group activities through voice, video and text on personal computers and mobile devices. The company's segments include YY IVAS and others, Huya broadcasting, and 100 Education.
In a corollary to ByteDance's continuous invasion of the search-engine business, Baidu is also constantly showing its ambitions in the short video and live broadcast field. In the first half of 2020, Baidu announced that live broadcast and video would be important directions in 2020. In April, Baidu announced that it would launch an e-commerce live broadcast. In terms of short videos, Song Jian, the former head of the Xigua Video, joined Baidu in early September.
Nowadays, ByteDance’s Douyin, Alibaba’s Taobao live broadcast and Tencent’s Douyu all pose threats to Baidu, indicating that for Baidu, YY, which is relatively independent and has its strength, is undoubtedly a potential alliance target.
In the 1Q 2020, YY Live broadcast continued to occupy the domestic entertainment live broadcast platform's top position with a scale of 41.20 million active users. The number of active users of Huajiao Live, which ranked second, is only 5.52 million.
At the same time, YY.com's domestic business has been somewhat weak due to its focus on overseas markets. In August 2020, JOYY’s Q2 financial report showed that the global monthly active users were 457.1 million, and overseas users accounted for 91%, implying that selling domestic business to Baidu may be a win-win option.