China web search giant Baidu upgrades AI engine as market share slips

Straits Times

a day ago

BEIJING – Chinese tech giant Baidu has unveiled the most significant upgrade to its search engine in years, promising more accurate and useful answers using artificial intelligence (AI), amid competition from the likes of Douyin and Xiaohongshu.
On July 2, Baidu announced a larger, 'smarter' search box, allowing users to type in queries of more than 1,000 words using natural language, including multi-part questions, instead of traditional searches done using keywords.
But whether China's largest search engine – which has faced falling market share in recent years – can turn the tide will depend on how successful it is in improving user experience while monetising its latest AI upgrade, said analysts.
At a media event in Beijing, Baidu representatives showed off its search's ability to output smartphone recommendations by different price categories, and pulled up relevant videos, in response to a query of 'electronic products suitable for gifts'. Previously, a similar search would have yielded a list of relevant links.
The revamped search will also try to anticipate users' needs. A query for 'Beijing GDP' should not only return the correct figure, Baidu said, but also graphs showing how the annual economic output has changed over time, as well as analyses by bloggers.
'We realised that the search box that has been with us for more than 20 years need to undertake new responsibilities,' said Ms Chen Yingmei, a manager with Baidu search, who gave a demonstration on stage. 'It cannot be simply an input box, but an AI assistant that can understand, make judgments and generate answers.'
Baidu , sometimes called China's Google , was founded as a search engine business in 2000, but its market share – and associated advertising dollars – has slipped in recent years, as users flocked to popular apps such as Xiaohongshu, Douyin and WeChat, which provide searches for their own burgeoning content.
Since 2023, Baidu's search engine is estimated to have between 50 and 55 per cent market share in China, down from around 65 per cent in 2020 . Baidu is still mainly used in China, where Google's search has not been available since 2010.
Asked to compare what Baidu is doing with Google, which in May revealed plans for an 'AI Mode' that it has branded the 'future of search', Mr Zhao Shiqi, general manager for Baidu search, said that both are similar.
'They have a separate mode but our (AI functions) are integrated on our main page. Google may have the same ideas; it's just that we may have a more urgent desire to make changes faster,' he said.
Google's AI Mode is a new search feature, officially rolled out on July 1, that also aims to provide generated summaries to queries using its own AI model, Gemini, rather than relevant links to websites, as is the case for a traditional search.
But Baidu remains in the early stages of commercialising its AI-powered search – how to bring in advertising or other revenue from users' search queries. Online advertising related to its core search business still accounts for more than half of its revenue.
Mr Zhao said many in the industry are still trying out different business models. He gave the example of American AI start-up Perplexity, which runs an AI search engine on a subscription model, at US$20 (S$25) a month.
'Another way is through commercial advertising, which others, including Google, are still experimenting with… But advertising in AI products will inevitably become more native,' he added.
Mr Stan Chen, account director at Emerging Communications, a marketing agency with offices in London and Shanghai, said that Baidu is in a race against time to reclaim its diminishing market share, with its latest AI upgrades playing a pivotal role in its strategy.
'Baidu faces the intricate challenge of balancing maintaining a superior user experience while simultaneously commercialising its AI products to bring in new revenue streams,' he said.
'Its ability to reverse market share losses and lead in the AI era will depend on successfully monetising this new 'answer hunting' paradigm (providing direct, conversational, and accurate answers to user queries), while creating new opportunities for advertisers.'
Assistant Professor Fang Kecheng, who studies media literacy at the Chinese University of Hong Kong, believes Baidu's search results have not improved in recent years.
This is both due to its own strategy of becoming a content platform rather than sending out traffic to the most relevant sites, as well as how much useful information in China's internet is trapped in platforms' walled gardens, such as Xiaohongshu and Douyin, which Baidu cannot access, he said.
Prof Fang in 2019 wrote a widely-shared piece titled Baidu As A Search Engine Is Dead. He argued then that Baidu's search was returning mostly results from its own content, such as blogging platform Baijiahao, instead of prioritising what users want to find.
'Baidu's new AI function seems to further extend its goal of becoming a platform where users stay, rather than a channel for users to go through... In other words, it's further deviating from its initial identity as a search engine,' he added.