After more than a decade of dedicated work on autonomous driving technology, Baidu's potential "second growth curve" that has yet to take off may soon be facing off against foreign competitors.

,Content / Muxuetong

,Edited by / TV

Proofread by / Mangfu

With the unveiling of Tesla's Robotaxi (self-driving taxi) after multiple delays, a race between domestic and foreign players in this field has officially begun, with the potential to develop into an international competition.

Just before Tesla's announcement, news of Radish's foray into international markets spread rapidly. It is rumored that the company is actively pursuing a global strategy, having conducted in-depth discussions with several international companies and planning to test and deploy self-driving taxis in places like Hong Kong, Singapore, and the Middle East.

The story of the "global battle for self-driving taxi supremacy" sounds ambitious, but the long lead time for implementation and unpredictable commercialization potential have caused outsiders to tighten their belts. "If Radish needs to expand internationally, who will invest in such an uncertain project overseas, given that the necessary support infrastructure is only available domestically?" commented Cui Dongshu, secretary-general of the China Passenger Car Association.

"Radish going global" is not without reason. In fact, Baidu has always been generous with its investments in autonomous driving.

As early as 2013, Baidu began planning its autonomous driving division, and after officially establishing its L4 division in 2015, the company invested no less than 10 billion yuan in research and development each year, with a cumulative investment of nearly 150 billion yuan over the past decade, dozens of times that of Huawei's investment in autonomous driving.

However, in terms of commercial transformation, Baidu, which aims to capture a significant share of the autonomous driving market, has only taken the first step on a long journey. Although Radish's fully autonomous taxi service in Wuhan garnered heated discussion when it launched on June 19th, it currently only accounts for 1% of the taxi service market in Wuhan. As of July 28th, 2024, Radish has provided over 7 million autonomous driving trips, while Didi completed an average of 33 million domestic trips per day in the second quarter of 2024.

In fact, the autonomous driving business is just one aspect of Baidu's operations. Over the past decade, Baidu has consistently struggled to launch new businesses that ultimately failed to live up to expectations.

As a former leader in China's internet industry, Baidu possesses strong comparative advantages in technology, but has struggled to translate these advantages into profitable businesses, suggesting potential issues with its business model.

Part.1

Enduring the AI Struggle

Paying for Missed Opportunities

There have been numerous analyses of why Baidu fell behind, with a significant factor being its inability to secure a ticket to the mobile internet era.

The iPhone, launched in 2007, ushered in the mobile internet era. Due to the fundamentally different interaction and usage scenarios of smartphones compared to PCs, the business model of the mobile internet also underwent significant changes.

In this new era, Alibaba and Tencent solidified their positions through mobile Taobao and WeChat, respectively. In contrast, Baidu continued to rely heavily on its search engine. For example, in 2014, it invested heavily in promoting its mobile app, featuring card-style search results, image search, and direct access to services.

In the early days of the mobile internet, Baidu's strategy largely continued the development path of the PC era, using various peripheral services to drive traffic to its search engine and protect its "best business model." However, in the mobile internet era, search is no longer the primary entry point for users, rendering Baidu's heavy investments in promoting its mobile search app largely ineffective.

To catch up in the mobile internet era, Baidu frequently pursued popular trends through mergers and acquisitions, incubations, and other means after 2013, investing in various hot businesses at the time. For instance, it acquired 91 Wireless for $1.9 billion, launched Baidu Waimai to compete with Meituan and Ele.me, and acquired Nuomi for group buying services.

Due to immense cost pressures and limited synergies with its core business, Baidu gradually abandoned its O2O businesses and sold Baidu Waimai at a discount after Lu Qi took over as CEO and declared "All in AI."

Baidu clearly lacked a clear development strategy in the mobile internet era. On the one hand, it hoped to maintain its dominant position as a core entry point in the PC internet era; on the other hand, it aimed to capitalize on industry trends by launching new businesses. However, these new businesses had limited synergies with its core business and spanned too broad a range, making it difficult for Baidu to compete with unicorn companies focused on specific verticals.

As a result, Baidu's influence in the mobile internet era lagged significantly behind Tencent and even newer players like ByteDance and Kuaishou. According to data disclosed by Guanyan Research Report Network, Tencent accounted for 35.7% of the total usage time of major app platforms in 2021, followed by ByteDance at 21% and Kuaishou at 10.2%, while Baidu only accounted for 7.7%.

Part.2

The Unsupportable "Second Growth Curve"

Mismatch between Technology and Business Vision

Compared to companies like Tencent that have successfully transitioned to the mobile internet era, Baidu, despite launching numerous new businesses over the past decade, still heavily relies on its core search business. According to Baidu's Q2 2024 financial report, its total revenue was 33.9 billion yuan, with online advertising contributing 19.2 billion yuan.

In contrast, Tencent has a more balanced business portfolio. In Q2 2024, Tencent's total revenue was 161.12 billion yuan, with value-added services contributing 78.82 billion yuan (48.92% of total revenue), online advertising contributing 29.87 billion yuan (18.54%), and fintech and enterprise services contributing 50.44 billion yuan (31.31%).

The reason why Baidu has struggled to develop a supportive "second growth curve" lies in its strategically aggressive yet short-sighted approach and tactically proactive yet inadequate execution. In his article "Baidu Has No Culture," Pan Luan commented that "Baidu possesses advanced technology but lacks the corresponding business vision to match it."

Take cloud computing as an example. Baidu was one of the earliest Chinese companies to engage in distributed computing, with leading technologies in machine management, resource scheduling, and network management in China's mobile internet landscape.

However, at the China IT Summit in March 2010, Robin Li publicly stated, "To put it bluntly, cloud computing is just old wine in a new bottle; there's nothing new about it."

Due to Baidu's initial indifference to cloud computing, frustrated executives left the company to contribute to the cloud computing businesses of other firms. For instance, in 2012, Baidu's chief architect Liu Shuanlin joined Alibaba as vice president of technology, collaborating with Wang Jian to establish Alibaba Cloud's architecture. Today, "rapidly growing intelligent cloud services" have become one of Baidu's three core business lines, serving as a driving force in the AI era.

In fact, Liu Shuanlin is not alone. Over the past few years, many former Baidu executives have left to join companies competing directly with Baidu in fields like AI and autonomous driving. For example, Yang Zhenyuan, the technical vice president of Toutiao, once served as deputy director of Baidu's search department, while Liao Ruoxue, Toutiao's technical advisor, was previously the chairman of Baidu's Technology Committee. More recently, Genspark, an AI agent search product, was developed by Jing Kun, the former CEO of Baidu's Duer.

According to statistics from Jiemian News, nearly 50 senior executives have left Baidu between 2003 and 2019, with vice presidents accounting for 40.82% of departures. After leaving Baidu, many of these executives have chosen to enter the AI and intelligent driving industries, competing directly with their former employer.

Strategic and tactical issues are at the root of the problem, while management and operational turmoil are merely symptoms. During Baidu's rapid expansion, its internal management mechanisms, incentive systems, and corporate culture failed to keep pace, impacting team vitality and innovation. This may be another reason for Baidu's decline.

After the incident involving Baidu's Vice President of Public Relations Qu Jing, Robin Li only briefly commented on it during a small-scale employee communication meeting. He praised Baidu's outstanding employees, stating, "You represent Baidu, you represent the true Baidu, you are the true representatives of Baidu." However, it's important to remember that the values of management reflect the company's values.

From PCs to mobile internet to AI, Baidu has always started strong but often fizzled out in the face of new technological waves. Repeated absences and setbacks have consistently failed to effectively bridge the gap between technology, products, and markets, resulting in products that lack the strength to compete head-on with fiercely competitive rivals.

Without addressing its internal issues, even with strong AI and autonomous driving technologies, Baidu's challenges and outcomes in the next era are unlikely to change.