Baidu, China’s answer to Google, got its name from an 800 year-old poem that compares the poet’s search for a beautiful but elusive woman with the quest for one’s dreams in life.
“Hundreds and thousands of times, for her I searched in chaos. Suddenly, I turned by chance, only to where the lights were waning, there she stood,” the poem reads.
The famous verses were widely quoted again in January 2017 when Baidu’s founder Robin Li poached Lu Qi from Microsoft to become the internet search firm’s president and chief operating officer.
Li, it was said at the time, had finally found the “retreating beauty” to drive Baidu’s dreams forward.
Lu previously ran Microsoft’s applications and service business. Chinese media reported that Li personally flew to Silicon Valley to woo the star manager, who he wanted to oversee Baidu’s “All-in AI” strategy (‘all-in’ because Li had identified artificial intelligence as the next big thing and felt Baidu could not risk missing out, after falling behind its BAT rivals Alibaba and Tencent in mobile internet applications).
However, only 486 days after Lu’s appointment, Li must search for a right-hand man again. The Baidu boss announced in an email to his employees on May 18 that Lu was stepping down due to “personal and family reasons” (Lu resigned from Microsoft on ‘medical grounds’ shortly before joining Baidu).
Lu’s resignation stunned stock market investors: the share price of the New York-listed firm dropped nearly 10% in the first trading day after the news broke, and wiped nearly $13 billion off Baidu’s market value.
Before Lu’s arrival, Baidu was hit by a slew of setbacks, especially when a death led to questions about dodgy sponsored medical links on its search engine (see WiC324). During Lu’s relatively brief stint with Baidu, National Business Daily noted, the company’s share price climbed more than 60%.
“Baidu has been on the verge of slipping out of the BAT league but led by Lu Qi, and a strategic transformation towards AI, investors have been seeing hopes of rejuvenation,” the newspaper wrote, adding that industry observers would inevitably question whether Baidu’s hefty investment in AI is going will now pay off.
Lu’s departure has also sent social media buzzing, including the WeChat groups of Baidu employees. Some of their questions have focused on the high turnover rate of Baidu’s senior staff.
36Kr, a tech news portal, pointed out that a spate of key personnel changes had already taken place in March and most of the departing managers had been working under Lu.
Jiemian, another news portal, also noted that the so-called “seven musketeers”, mainly co-founders of Baidu with Li, had all left the company.
To some these managerial changes were about Li reasserting control, after he’d stepped aside and given Lu a more active management role. According to Jiemian, Lu’s departure has brought the curtain down on a “triangle power structure”, in which Li oversaw Baidu’s newsfeed advertising business, Lu was put in charge of the company’s daily operations and especially AI development, while Ma Dongmin, Li’s wife, took care of investments.
Ironically, over the past two weeks another ‘triangle’ – allegedly involving Li – has been one of the hottest trending topics on China’s internet. In another statement published last month, Baidu said recent rumours about Li’s family issues and marital status were “all entirely false”. Because they have caused damage to the reputation of Baidu and Li (and his wife Ma as well), the company has reported the case to the police.
In a month of bad news, the next unwelcome headlines could emerge when Xiaomi completes its Hong Kong IPO in the coming weeks. Thanks to the recent plunge in Baidu’s market capitalisation there is a strong chance it will soon be deemed less valuable by investors than Lei Jun’s eight year-old firm. Should that be the case some analysts will argue for a reconfiguration of the BAT troika into TAX (Tencent, Alibaba and Xiaomi) – dumping Baidu from the Chinese tech world’s most elite acronym.
Another possible blow: iFeng reports there are rumours that Lu will join Xiaomi as a partner and head up its mobile AI business.
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