In China, AI and cloud boost Baidu revenues by 52%

China's search giant Baidu beat revenue estimates after its AI and cloud efforts started paying off.

Its non-advertising revenues, from areas such as AI and cloud, rocketed 52%.

Sales overall rose by a respectable 4.8% in the last three months of 2020.

At a time when Twitter relies on ads for an uneasy 89.6% of its revenues and Facebook for an unfathomable 97.9% of its, you can bet other companies will now be sitting up and taking note.

No bye-bye for Baidu

Baidu now bounces back nicely from a 6.5% drop in its revenues in the first quarter 2020, when advertisers jumped ship from China's online search giant.

Advertisers instead preferred to place adverts in nimbler, mobile-based content feeds, like ByteDance's Douyin and Tencent's Kuaishou. (Douyin is TikTok's name in mainland China.)

Universal search seemed to face a growth bottleneck, especially in China, where traffic stayed locked inside apps like Douyin and Tencent's WeChat.

Baidu's attempt to build a more WeChat-like Baidu super-app, pulling together a wide range of services, fell flat in a crowded market.

In response, Baidu plowed back a fifth of its 2020 revenue into research and development. It now has the most AI patents and patent applications in China, the company tweets.

The Beijing-based tech company, whose holding company is in the Caymans, has meanwhile seen its market capitalization rise to around $105 billion.

Having already invested billions of dollars in voice recognition, natural language processing, and self-driving cars, Baidu is now working on a $3 billion syndicated loan deal to fund more of this, as well as a separate $3.5 billion second share listing in the first half of the year on the Hong Kong stock market, adding to its existing Nasdaq listing. Analysts have suggested a listing nearer its home market may help along its share price.

Baidu, alongside Tencent and Alibaba, managed to sidestep a late Trump administration effort to put the companies on a blacklist banning US investors from holding its shares.

Former treasury secretary Steven Mnuchin managed to fend off China hawks in the US cabinet by arguing the move would hit US investors.

AI you can drive my car

While companies like TikTok owner ByteDance have angled for China's growing advertising market, Baidu has parked its tank instead on mature AI use cases.

It's so far yielded partnerships like January's one with carmaker Zhejiang Geely Holding Group, to make smart electric vehicles.

The vehicle's three years away, says Robin Li, founder of Baidu, which has been developing AI software in its self-driving unit, Apollo.

But a sneak peak came this Chinese New Year, with a demonstration rollout of 50 Robotaxi pickup stations in Guangzhou, shuttling sightseers around to see the lakeside flower blossoms and towards festive destinations.

The joint venture has plumped for Mobike's co-founder and former chief technology officer Xia Yiping as its chief executive.

Xia is also a veteran of Ford and Fiat Chrysler, helpfully.

Meanwhile in a case of swings and roundabouts, its Netflix-style platform iQiyi saw a second quarter of revenue declines as Chinese Internet users shift to short-video platforms like ByteDance's Douyin.

iQiyi also suffered in 2020 when it fell under investigation by the US Securities and Exchange Commission as part of a short-selling probe.

Making a rearguard effort to wrest eyeballs away from Douyin and Kuaishou, Baidu says it has "substantially completed" a $3.6 billion purchase of the YY live-streaming network from China's Joyy Inc.

Online marketing remains a strong source of profit, so it is not an area Li's company will want to abandon altogether.

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Pádraig Belton, contributing editor special to Light Reading

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