On Tuesday, May 22nd, several publishers reported, In an attempt to sharpen its focus on artificial intelligence, Baidu, the Chinese search giant would further be exploiting its business unit responsible for utility apps and its mobile ad business.
In accordance to the spin-out, a huge chunk of its equity is being sold by Baidu in the ‘Global DU’ business to investors who are yet unknown.
The company has opted to sell “a majority equity stake” in order to achieve Global DU independent. Baidu has targeted at a Q3 2018 timeframe for the deal to get completed, once this happens, its business share would drop to nearly 34 percent. However, in order to assure the growth of its business, the company would most certainly opt to raise additional.
It is a quite the common practice for Chinese tech companies to spin out its business units, as Baidu itself recently indulged in such a practice with its financial services business.
The latest spin-out would present Global Du with “autonomy and agility in its operation,” as per Herman Yu, the CFO of Baidu. “Along with that, it would also permit Baidu to lay more emphasis on artificial intelligence.”
It was also announced by the company, that a new global business unit around its AI-powered services would be installed, which would come with the recommendation engine PopIn, keyboard app Simeji and various other services in the U.S. as well as Southeast Asia. By doing so Baidu plans on allowing these services to work more closely with Baidu’s AI labs, which includes its locations in Seattle and Silicon Valley.
This extra push has previously already provided much-needed backing for Baidu’s earnings, which had hit a major roadblock when the Chinese government invested internet advertising which focused on medical services.
However, even the AI push, was not enough as Baidu has faced a drawback when a key personnel departed over the past year.
Earlier in the previous week, the highest-ranking AI specialist and president and COO of Baidu, Qi Lu resigned from the company duties due to personal reasons. The exit came as a major shock, especially since the former Microsoft executive took charge of the role less than a couple of years ago.
If that was not enough, Andrew Ng a globally recognized AI pioneer that set up its U.S.-based research labs back in March 2017 also announced its exit from Baidu, prior to Lu’s resignation. During the latter half, the head of Baidu’s Silicon Valley lab announced its exit too.