The Next Frontier

Baidu veers from its core business to gamble on artificial intelligence

- Yue Wang

Chinese search-engine operator Baidu, dubbed the Google of China, is betting big that smart machines will disrupt industry after industry. Of the $3 billion Baidu spent in research and development (R&D) over the past two-and-a-half years, the majority has gone to artificial intelligence (AI), says Wang Haifeng, the company’s vice president and head of the AI group.

In the past quarter alone, R&D expenses went up by 35 percent from a year ago, to $412 million, according to Baidu’s 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 health care.

To Baidu, however, AI means more than frontier research. The company needs AI-enabled services to bring in new revenue, as its core online-advertising revenue faces mounting pressure from government restrictions, particularly in health care ads. What’s more, advertisers are flocking to ecommerce and social media platforms such as Tencent’s messaging app WeChat and Ali baba’s Taobao marketplace. According to consultancy eMarketer, Alibaba accounted for 29 percent of China’s $42 billion digital advertising market in 2016, with Baidu’s share falling to 21 percent from 28 percent in 2015.