Inside Baidu's Billion Dollar Push To Become An AI Global Leader

May 9, 2017 | 1986 Views

To Chinese search engine operator Baidu, the future is set in stone. The company, dubbed the Google of China, has been investing heavily in artificial intelligence, betting that smart machines will disrupt industry after industry.

Of the 20 billion yuan ($3 billion) Baidu spent in research and development over the past two and a half years, the majority goes to AI, the company's vice president and head of artificial intelligence group Wang Haifeng told FORBES in a recent interview. In the past quarter alone, R&D expenses went up by another 35% to $412 million from a year ago, according to its latest financial results.

Like Google, Baidu wants to use the technology to refine its search algorithms, develop voice assistants, produce self-driving cars and build augmented reality tools that may soon have broader applications in marketing, tourism and healthcare.

To Baidu, however, AI means more than frontier research. The company needs AI-enabled services to be new money spinners, as its core online advertising revenues face mounting pressure from government restrictions in healthcare ads. What's more, advertisers are flocking to e-commerce and social media platforms such as Tencent's messaging app WeChat and Alibaba's Taobao marketplace. According to consultancy eMarketer, Alibaba accounted for 29% of China's $42 billion digital advertising market in 2016, with Baidu's share falling to 21% from 28% in 2015.

In the past quarter, Baidu's operating profit declined by 9% to $291 million, after going down 14% last year. Its other diversification efforts have produced mixed results. The company invested billions of dollars in online-to-offline services a few years ago, betting that it would earn healthy commission fees from cinemas, restaurants and other local services using its products to connect to nearby customers. But that plan failed to gain much traction, as the Tencent-backed Meituan Dianping  now holds 80% of this $100 billion market, according to Beijing-based consultancy Analysys International. iQiyi, its online video unit that just inked a streaming partnership with Netflix, remains popular but rising content cost means it is loss-making. Read More

Source: Forbes