Baidu's equity investment shrank 40% in the first quarter of the year, and it is losing its status as one of the top three internet companies in China.
The year has not been good either for Baidu or for its founder and chief executive Robin Li.
At Baidu’s AI conference in Beijing on Wednesday, Li was doused in cold water while giving a speech about artificial intelligence.
The incident became a hot topic on Chinese social media. But people didn’t seem to have much sympathy for Baidu. Most netizens made jokes about Baidu’s poor behaviour as a Chinese internet giant while other commented sarcastically about Li’s calm response.
An official statement from Baidu came half an hour later, saying that this wouldn't stop its “determination to go forward”. But data shows a different picture. Baidu, once the largest search engine in China, is no longer in its prime.
Baidu’s equity investments this year have been significantly less than those of Tencent and Alibaba. According to data from CVSource, Baidu participated in 24 equity investments up to July 3, while Tencent participated in 51 and Alibaba in 39 (including Ant Financial’s investments).
The Chinese search giant said that its equity investments had caused a 57% decline in other income during the first quarter of the year. That, in turn, had led to a decrease in Baidu’s overall investment in the quarter. It only completed 13 investments, 40% less than the same period last year.
“Baidu is no longer top on the list for startups when they search for funding,” one investor told FinanceAsia. “Tencent and Alibaba are now the two biggest strategic investors in the Chinese market.”
Comparing to Baidu, Tencent had a better performance in terms of equity investment. In the first three months of the year it returned Rmb11 billion ($1.6 billion).
And even though Tencent’s investment dropped 72% compared to the same period last year, it still invested in more companies than Baidu: 17 companies to 13.
Baidu is also facing an outflow of talent from its core AI business. Former chief executive Qi Lu left the company in July last year only after 19 months in the job. And most of the scientists in its autonomous driving and AI units have left to start their own AI businesses. These include unicorns like Pony.ai and Horizon Robotics.
The water-throwing incident had made Baidu’s problem more obvious. The Chinese search giant really needs to find a long-term solution for its business downturn.
