AI China

AI Drives Baidu Q2 Profits, but Stock Falls on Google Chinese Search Engine Speculation

On the same day Baidu was announcing another quarter of strong earnings, the Chinese search engine giant's stock prices suddenly tumbled on a report American rival Google is planning to launch a new search engine for the Chinese market.

On the same day Baidu was announcing another quarter of strong earnings, the Chinese search engine giant’s stock prices suddenly tumbled on a report American rival Google is planning to launch a new search engine for the Chinese market.

Baidu’s second quarter earnings topped Wall Street estimates, rising 24.4 percent to CN¥25.97 billion (US$3.10 billion), and the company’s net income surged 45 percent to CN¥6.4 billion yuan (US$967 million). The figures were released in an earnings call yesterday morning. Baidu’s US-listed shares initially rose about four percent in after-hours trading, then fell almost eight percent when the Google news broke.

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AI drives revenue growth

A driving force in Baidu’s Q2 earnings was advertising business on its news feed app and search engine, which rose 25 percent to CN¥21.1 billion (US$3.10 billion). Much of this can be attributed to the integration of AI and machine learning.

Baidu’s search engine for example applied deep reinforcement learning — a machine learning technique widely adopted in robotics and games — to optimize advertising performance by delivering more relevant keywords, images, and video suggestions, which improved ad conversion and acceptance rates.

In June, the Baidu App average daily active users reached 148 million.

Google Chinese search engine rumours

Some 12 hours after Baidu announced its sunny Q2 earnings, rumours surfaced that it would soon face a competitor that also knows a thing or two about search engines.

A story in The Intercept outlined a Google plan to re-enter the Chinese market: “The project – code-named Dragonfly – has been underway since spring of last year, and accelerated following a December 2017 meeting between Google’s CEO Sundar Pichai and a top Chinese government official, according to internal Google documents and people familiar with the plans.” The report says Google has already come up with a custom Android app which been presented to the Chinese government for approval and could be available in the next six to nine months.

Access to Google Search has been limited in China since a disagreement over censorship in 2010. According to the Intercept story, the new search engine “will blacklist websites and search terms about ‘human rights, democracy, religion, and peaceful protest.’”

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Google has been seeking opportunities to rebuild its presence in China. Last December, Google opened an AI center in Beijing, and it has been actively expanding partnerships with top Chinese academic institutions such as Tsinghua University, Peking University, and the University of Science and Technology of China.

Google launched a Mandarin version of its TensorFlow website this year, set up a TensorFlow account platform on China’s biggest social-networking app WeChat, and launched a TensorFlow community website. Two weeks ago, Google’s new WeChat AI-powered doodle mini-game Cai Hua Xiao Ge (猜画小哥) went viral.

Baidu embraces autonomous driving and smart assistants

Like Google, Baidu is much more than a search engine. Baidu CEO Robin Li is betting heavily on the company’s autonomous driving project Apollo and AI assistant platform DuerOS, both released at the Baidu 2017 developer conference.

Apollo provides developers access to a complete set of vehicle, hardware, software, and cloud data service solutions; as well as an API and codes for obstacle perception, route planning, vehicle control, and operating system.

Baidu has begun mass production of Apolong(阿波龙), China’s first L4 fully autonomous bus. Developed in partnership with King Long and powered by Apollo, Apolong will be put into commercial operation in selected Chinese cities.

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Baidu Apolong autonomous bus rolls off assembly line

CEO Li envisions many possible business applications for Apollo: providing HD map services and localization technologies, simulation software sales, Apollo Computing Unit packages, etc.

DuerOS meanwhile is the company’s platform for conversational AI. DuerOS supports home appliances like TVs and smart speakers and mobile devices like phones or watches. Developers can access open-source SDKs and APIs to build third-party voice conversational services. The DuerOS bot platform also provides many skills. Over 90 million devices have been embedded with DuerOS.

Earlier this summer Baidu rolled out its flagship DuerOS-based smart speaker Xiaodu.


Journalist: Tony Peng | Editor: Michael Sarazen

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