Baidu: Can It Avoid Repeating 360's Mistakes in the Era of AI?

Baidu, once an internet giant, is now facing numerous challenges, and its future development is under scrutiny. The question remains whether Baidu will become the next 360. The explosive popularity of DeepSeek has once again brought Baidu to the forefront of public opinion. Looking back at Baidu's business layout over the past decade, aside from Duxiaoman and iQIYI, it's challenging to find other profitable businesses.

Baidu's search entrance was its cornerstone during the PC and internet era, allowing it to occupy an important position. Despite a decline in market value, its profit performance remained satisfactory, earning it the title of an "evergreen tree" in the internet era. However, with the advent of the AI era, Baidu seems to be facing a similar dilemma to 360's. If it fails to defend its traffic entrance, it may follow in 360's footsteps.

360 dominated the PC era with its 360 Security Guard, which had a massive user base and generated substantial advertising revenue. However, with the rise of smartphones, users shifted to mobile devices, and short-video platforms like Douyin and Kuaishou emerged, capturing user attention and advertising revenue. 360's PC-based revenue ecosystem gradually declined, and its security software struggled to replicate its PC success on mobile devices.

Similarly, Baidu grasped the traffic entrance in the mobile internet era, gaining a nearly decade-long reprieve. It attempted various businesses, including food delivery, e-commerce, ride-hailing, and short videos, but only Duxiaoman (a lending platform) achieved significant success. Today, as one of the two major search giants from the PC era, Baidu's development trajectory is becoming increasingly similar to 360's. Both companies rely heavily on traffic-based advertising revenue, and the advent of the AI era will disrupt many ecological models, posing a significant challenge to Baidu's future.

Baidu's 2024 financial report revealed a decline in traffic entrance revenue, with total revenue decreasing by 1% year-over-year to 133.1 billion yuan. Online marketing revenue, Baidu's most profitable business, dropped by 3%. The rise of platforms like Douyin and Xiaohongshu may continue to erode Baidu's advertising revenue.

The explosive popularity of DeepSeek has attracted numerous giants to join the user acquisition war, including Tencent, smartphone manufacturers, and others. OPPO and Honor have already launched AI-powered smartphones compatible with DeepSeek, and many phone voice assistants have surpassed Baidu's search experience. For instance, when asking "what to do with a cough that lasts for a week," Honor's voice assistant provides detailed suggestions, while Baidu's search results are mostly ads with little useful information.

In the automotive sector, both Baidu and 360 have struggled. 360's investment in Nezha Automobile has been largely forgotten, and CEO Zhang Yong has left the company. Baidu's automotive business, including Jidu Automobile, autonomous driving, and Luobo Kuai Pao, faces significant challenges. Jidu Automobile, backed by Geely, ended in a fiasco, not only wasting resources but also damaging Baidu's reputation and affecting consumer trust in its future car-making endeavors.

Baidu's autonomous driving business has invested over 10 billion yuan, cultivating a large team of engineers. However, from a commercial perspective, entering the market early does not guarantee significant returns. Currently, few car manufacturers have adopted Baidu's autonomous driving technology, and the failure of Jidu Automobile has increased the difficulty of commercialization. With Huawei, Xiaomi, and other companies entering the market, most new energy vehicle manufacturers will prioritize intelligent driving as a core competitiveness, with some developing their own technologies and others partnering with Huawei.

Baidu Smart Cloud's performance in the 2024 financial report was impressive, with AI-related revenue growing nearly threefold year-over-year, and fourth-quarter revenue increasing by 26%. However, in the overall cloud market, Baidu Smart Cloud is no longer in the top tier. Although it leads the Chinese large model market, this market is still in the burn-money phase, and the price war among cloud vendors has accelerated with the popularity of DeepSeek.

Some argue that MaaS (Model-as-a-Service) might be the worst business model in China in the short term, as the more users, the more losses. The market is crowded with giants, and Baidu's market value lags behind Tencent, Alibaba, and ByteDance, making it uncertain whether it can sustain its efforts in the long term.

Baidu's old products, Baidu Tieba and Wenku, have been mentioned repeatedly in recent months. There are rumors that Baidu Tieba's 2025 strategy focuses on reducing ads, promoting user-generated content, and encouraging old users to return. Baidu Wenku was also in the spotlight last year, even being listed as an AI product by an unknown institution