Baidu will shift its business model to AI

The head of Baidu Inc has pledged to shift the company’s business from a search-orientedmodel to one based on artificial intelligence, after a recent government probe put a chill on itscore search business.

Baidu CEO Li Yanhong said in an internal letter on Tuesday that the shift will allow thecompany to develop such areas as voice search, automatic translation and driverlessvehicles.

Li, who is a co-founder of Baidu, which runs China’s largest online search engine, also vowedto emphasize user experience over income and to set up a department to root out anybehavior that might damage user experience.

“The department will have the final say to veto any behavior that is not in line with a good userexperience,” Li said in the letter, which Baidu made public later on Tuesday. “Some of themeasures we take may have a negative impact on the company’s income. But I believe it isthe right thing to do.”

Analysts said the move is expected to dampen Baidu’s near-term profitability, which in turnwould make it more challenging for the company’s new business initiative to gain momentum.

The vow to put users ahead of business performance came after a government investigationled to a demand that the search giant overhaul its paid listing system. The probe came afterthe death of Wei Zexi, a 21-year-old college student, who underwent an experimental medicaltreatment that had been advertised among Baidu’s search results.

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The Cyberspace Administration of China, which launched a joint investigation of Baidu withother authorities last week, said on Monday that the company had “influenced the impartialityand objectivity of its search results, making it easy to mislead users, and this must beimmediately rectified.”

In response to the government’s demand, Baidu said on Monday that it will restrict theproportion of sponsored search results to 30 percent per web page and adopt a new listingsystem that does not fully depend on the advertising price, but also considers advertisers’ “reputation”.

Other actions include placing clear disclaimers on advertisements, so that online users cantell them apart from natural search results, and establishing a 1 billion yuan ($153.4 million)fund to compensate netizens cheated by false promotions.

Industry observers said the moves are likely to hurt Baidu’s short-term profitability, sincemedical-related ads are estimated to account for 25 percent of its revenue.

Lyu Ronghui, analyst with internet consultancy iResearch, said Baidu’s revenue is likely todecline in the near future because the company will have to turn down some medical-relatedads and might also spend more money to verify the qualifications of medical organizations orenterprises.

(Source: China Daily)

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