China’s dominant search engine, Baidu is basically the Chinese version of Google. Since Google exited China in 2010, Baidu has grown significantly, expanding into a wide range of portals and cloud-based apps. Currently, the company controls around 80% of the China search engine market share.
One of Baidu’s main revenue streams, selling internet advertisements, was hit hard in 2016 after the government imposed stricter regulations. As a result, many advertisers decided to switch platforms, causing the company a huge drop in its advertising earnings.
The search giant also conducts research into artificial intelligence and self-driving cars, and is counting on its AI projects to offset the downturn in its advertising business. Baidu’s chief operating officer Qi Lu remarked at a press conference that the company is confident in beating Alphabet Inc at driverless cars within the next three to five years.
Although in 2016 Baidu reported its first annual earnings decline since it went public in 2005, the company has recovered this year – posting 14.3% revenue growth for the second quarter of 2017, and generating net income of CN¥4.4 billion (US$671.8 million). And the future looks bright for Baidu: the company is expected to register a year-on-year revenue increase of 26.7% to 30.1% for the third quarter of 2017. Wall Street analysts are predicting that Baidu’s revenue and earnings will rise 21% and 47% respectively this year.