The two companies had initially agreed to a $3.6 billion acquisition in 2020 during the pandemic, which saw a significant increase in video-streaming usage among homebound individuals. However, the deal was ultimately derailed in January of the following year due to a lack of regulatory approvals.
With Beijing's recent easing of its regulatory stance towards the technology industry, Baidu has successfully completed the acquisition of YY Live. The company did not specify the reasons behind this change, but discussions aimed at resolving the situation had been ongoing since the deal's collapse.
JOYY had previously received approximately $1.86 billion in February 2021 as part of the original agreement, along with an additional $240 million on Tuesday.
This acquisition is expected to enhance Baidu's revenue diversification and improve its competitive position against online entertainment rivals like Douyin and ByteDance, which have established a strong foothold in the market.
In premarket trading, Baidu's U.S.-listed shares increased by 1%, while JOYY's shares rose by 6%.
IQIYI, a subsidiary of Baidu listed in the U.S., is often regarded as China's equivalent to Netflix. However, it has faced significant competition from both startups and established players such as Tencent and Alibaba's Youku, leading to a nearly 60% decline in its shares last year.
Additionally, this acquisition may bolster Baidu's ambitions in artificial intelligence and cloud computing, as it releases $1.6 billion that had been held in escrow as part of the 2020 agreement. These funds could be utilized for essential equipment needed to compete in the increasingly prominent AI industry, particularly following the remarkable success of cost-effective models from DeepSeek.