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source from:WSJ
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Top Aide to Baidu CEO Robin Li to Step Aside
Helen He is taking a reduced role
By LI YUAN and ALYSSA ABKOWITZ
Updated July 1, 2016 5:11 a.m. ET
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A top aide to Robin Li, chief executive of China’s dominant search engine Baidu Inc., is stepping aside, according to people familiar with the situation, as the company searches for ways to reduce its dependence on search-related revenue.
Helen He, a top adviser and strategist for Baidu, is taking a reduced role, these people said. Ms. He has been among Mr. Li’s closest confidants in the past few years and the driving force behind Baidu’s foray into products and services ranging from e-commerce, fintech and food delivery. Ms. He’s official title is senior consultant, but she is among a handful of executives whom Mr. Li works closely with, say people with knowledge of the matter.
The move could signal that Mr. Li is changing his strategy on how the company will diversify its revenue sources—at a time when Baidu’s search practices have come under scrutiny by the Chinese government and internet users. Currently, more than 90% of Baidu revenue come from search. The company has gone through a few reorganizations in the past few months, and Mr. Li is expected to focus more on fintech and artificial intelligence-related projects, according to a person familiar with the matter.
A government investigation this spring found that Baidu needed to revise its ad and search practices to clearly identify promotions and limit advertising results on each page. The investigation was prompted by the death of a college student with cancer who had used a therapy found through an online ad on Baidu.
In June—in light of the regulatory inquiry—Baidu cut its second-quarter revenue expectation to 2.8 billion dollars from 3.1 billion dollars. Analysts have estimated that nearly 30% of Baidu’s ad revenue comes from the medical and health-care sector and have said the changes to Baidu’s algorithms are cause for revenue concern.
At the World Economic Forum in Tianjin in late June, Baidu President Zhang Yaqin acknowledged the company’s recent struggles: “In the last six months or so we have [had] a couple of crises that have to do with the credibility of information that we vet. Obviously we will continue to make our information, to make our search results more reliable and accurate.”
In an effort to diversify its business, Baidu announced last year it would spend 3.2 billion dollars on on-demand services and e-commerce. At the time, Mr. Li said, “Traditionally, search is considered as a tool to connect people with information, but we think in the age of mobile, search can function as a tool for connecting people with services.”
But on-demand services such as meal delivery proved to be much more competitive and expensive than the company had initially expected, people close to it say. The company has had to compete head-to-head with startups backed by Alibaba Group Holding Ltd. and Tencent Holdings Ltd. in a costly discounting war that has yet to establish one company in a dominant market position.
Baidu lags far behind Alibaba and Tencent in investing in outside firms to build reach. As of this spring, Baidu had completed 12 deals valued at 100 million dollars or more in the last five years, compared with 44 by Alibaba and 41 by Tencent, according to data compiled by research firm Dealogic.
Insiders say Ms. He has been the force driving the catch-up game. She was also behind Baidu’s strategic partnership and investment in UberChina.
But Baidu is considered to be too late to the game on some services, such as its mobile-payment system Baidu Wallet, which has 45 million users compared with Alibaba’s financial affiliate Ant Financial’s more than 450 million users of Alipay.
In a Caijing Magazine Q&A published last weekend, Mr. Li said he would like to see Baidu’s revenue expand beyond searches to services, such as charging commissions for hotel rooms booked on Baidu map and bank loans. But he didn’t mention online-to-offline services—one of his favorite topics in the past year. When asked whether he has thought about giving up the competitive meal-delivery business, he responded, “If we really can’t win, we won’t do it. We’ll make the decision if necessary.”
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