BEIJING (BLOOMBERG) - Baidu and Tencent Holdings have pulled out of a US$3 billion (S$4.02 billion) venture with one of China's richest men, barely two years after it was launched with the ambition of revolutionising mall shopping.

China's largest search engine and its top Internet company teamed up with billionaire Wang Jianlin's Dalian Wanda Group to set up ffan.com in 2014. At the time, they talked about how the venture could become the world's largest e-commerce platform by - among other things - helping shoppers find stuff in malls, and merchants manage payments and data.

Instead, Baidu and Tencent had been replaced as shareholders by a company backed by Mr Wang as of July 7, a corporate filing showed.

The split came as China's biggest technology companies burn billions of dollars in a race to become the go-to provider of online services such as food delivery, as Tencent and Baidu focus on their own platforms. The venture, which has pivoted towards online membership and rewards programmes, was in part a response to the growing dominance of Alibaba Group Holding in every sphere of Internet commerce.

"They have failed to come up with a good value proposition for why customers should buy in and that essentially explains why it has fallen apart," Ms Sandy Shen, a Gartner research director, said.

It is unclear why Baidu and Tencent jettisoned their investments. But the three largest Internet companies have begun to encroach upon one another's turf, and their businesses now compete head-on in everything from mobile software and online commerce to entertainment.

Representatives for Wanda and Baidu declined to comment. Tencent didn't respond to an e-mailed request for comment.

The venture was launched with much fanfare in 2014, though the website didn't get up and running until a year later despite solid financial backing. The trio invested a total of 5 billion yuan (S$1 billion), worth US$814 million at the time, with Baidu and Tencent each taking a 15 per cent stake.

In January 2015, Wanda said it had raised another 1 billion yuan from external investors in a round that valued the venture at 20 billion yuan. Their website ffan.com, whose holding company is Shanghai Xin Fei E-Commerce Co, debuted in July 2015.

Wanda appears committed to ffan.com. Just this week, it said it had signed up 120 million members for the mobile app. But its two highest-profile investors appear to have walked: According to the filing, Baidu and Tencent have been replaced as investor-shareholders by Shanghai Wanda Network Financial Services Ltd, though the pair could retain an inconsequential stake in the venture that need not be reported.

"These three companies had very different areas when they started. Tencent was focused on gaming, Alibaba was focused on e-commerce and Baidu was focused on search engines," said Ms Kitty Fok, IDC China's managing director. "Now they're overlapping more and more and that's increased competition."