(Yicai Global) Nov. 17 -- Baidu’s shares dropped in pre-market trading in New York after the Chinese internet giant confirmed earlier news reports of plans to further develop its non-advertising business by buying Joyy's live-streaming service YY Live.

Baidu [NASDAQ: BIDU] fell as much as 2.4 percent to USD144.35 before the stock market opening today, after gaining 1.9 percent yesterday.

The USD3.6 billion cash offer will enable Baidu to expand its know-how in video-based social media, founder and Chief Executive Robin Li said during a third-quarter earnings call after the US market closed yesterday. The deal is expected to close in the first half of next year, Joyy said in a statement.

The acquisition is part of steps Beijing-based Baidu is taking to diversify its revenue streams by moving into emerging technologies. Li said Baidu's artificial intelligence and cloud computing business were growing. But income from online advertising still accounted for CNY18.4 billion (USD2.8 billion) of the firm’s CNY28.2 billion revenue in the third quarter, according to its financial results.

“We are excited about the opportunities ahead by merging Baidu’s large traffic and vibrant mobile ecosystem with YY’s expertise in video programming, creator network management and social media community development,” Li said. “Together with YY’s team, we hope to explore the next generation of live video and venture beyond entertainment into every facet of our lives in the years to come.”

Shares of Joyy [NASDAQ: YY] rose 1.6 percent yesterday to USD95.58 apiece.

The Guangzhou-based social media company also released its third-quarter earnings today, revealing where most of its growth lies. Revenue jumped 36 percent to CNY62.9 billion (USD925.9 million) in the three months ended Sept. 30 from a year ago, primarily driven by Joyy’s overseas platform Bigo Live, which was originally created by Singapore's Bigo Technology. 

Net profit soared more than 37 times to CNY2.3 billion. Meanwhile, Joyy’s net profit margin rose to 36.6 percent from 1.3 percent, mainly due to selling some of its shares in live-streaming platform Huya.

“The transaction will allow YY Live to access Baidu’s massive user traffic, boost its business growth, and enhance its ecosystem’s monetization capabilities to unleash greater value in a larger ecosystem,” Joyy Chairman David Li said.

Editor: Emmi Laine