Baidu Sells Majority Stake in Ad Business to Prioritize AI
Baidu is spinning off its Global DU ad and app division to undisclosed investors, reducing its ownership to 34 percent. The strategic move allows the Chinese search giant to channel its resources and focus directly toward artificial intelligence.
Baidu is spinning out its Global DU business unit, which includes utility apps and a mobile ad network, to shift its primary focus toward artificial intelligence. The Chinese search giant is selling a majority equity stake to undisclosed investors, a deal that is on track for completion in the third quarter of 2018. After the transaction, Baidu's ownership in the newly independent Global DU drops to approximately 34 percent, and the spun-out entity plans to raise additional capital to fuel its own growth.
This strategic separation provides Global DU with greater autonomy and agility in its daily operations, according to Baidu CFO Herman Yu. By offloading this advertising division, Baidu frees up resources to establish a new global business unit dedicated exclusively to AI-powered services. This new group encompasses the PopIn recommendation engine, the Simeji keyboard app, and various other services operating in the United States and Southeast Asia.
These AI-focused services now operate more closely with Baidu's research labs located in Silicon Valley and Seattle, a structure that is already helping the company improve its earnings after previous setbacks from medical ad regulations. However, this intensified push toward artificial intelligence occurs alongside significant talent turnover, highlighted by the unexpected departure of President and COO Qi Lu last week and the earlier exits of AI pioneer Andrew Ng and the former head of the Silicon Valley lab.