Chinese technology behemoth Baidu is currently undergoing extensive workforce reductions across numerous departments and implementing a major reorganization of its artificial intelligence sectors. This strategic shift comes in the wake of a financially challenging quarter, despite a substantial rise in revenue from its AI initiatives. The company's objective is to optimize its operational efficiency and sharpen its focus on key AI research and development, particularly concerning its Ernie model series, by entrusting more responsibility to emerging leaders.
Baidu has initiated layoffs affecting staff in key Chinese cities, including Beijing, Shanghai, and Guangzhou. These job cuts span various critical business units, from its mobile ecosystem group, which encompasses its primary search services, to its intelligent cloud and technology platform groups. Affected employees have received severance packages, typically including a month's pay for each year of service, plus an additional one to three months' salary. This marks one of the most substantial layoff events at Baidu in recent times, signaling a decisive move to rationalize its operations.
The company's decision to downsize its workforce follows a third-quarter financial report that showed a significant loss of 11.2 billion yuan (approximately US$1.6 billion). This loss was primarily attributed to asset write-downs, and it occurred despite a 50 percent surge in AI-related revenue. The growth in AI, however, was insufficient to counteract the overall revenue decline of 7 percent year-on-year, largely due to sluggish demand in its advertising business amid a broader slowdown in economic growth. Baidu had already seen a 9.8 percent reduction in its employee count by the end of 2024 compared to the previous year, highlighting an ongoing trend of workforce optimization.
In a significant internal reorganization, Baidu has restructured its AI model development by creating two distinct units: one for foundational models and another for application models. Both new units now report directly to Baidu's founder and CEO, Robin Li Yanhong. This new structure is designed to oversee the development of the company's Ernie AI model series. Notably, the leadership of these flagship AI models has been handed over to a younger generation of managers, reflecting a strategy also adopted by other major tech players like DeepSeek and ByteDance, which aims to empower rising talent in AI research.
Additionally, there has been a change in leadership for Baidu's ChatGPT-like Ernie bot app, known as Wenxin in China, with Xue Su being replaced as its head. This comes as Baidu faces intensifying competition in the Chinese AI market. Its Ernie chatbot, despite being one of the first domestic challengers to OpenAI's ChatGPT, has seen a decline in user numbers, ranking ninth in monthly active users among Chinese AI chatbots. Analysts suggest that Baidu is striving for maximum flexibility in its approach, recognizing the increasing commoditization of large language models in a highly competitive landscape.
The ongoing adjustments at Baidu, including the strategic layoffs and the restructuring of its AI divisions, underscore the company's efforts to adapt to a challenging economic environment and an intensely competitive AI market. By focusing on streamlined operations and empowering a new wave of AI talent, Baidu aims to regain its footing and reinforce its position as a leader in artificial intelligence technology.