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Baidu spins out its global ad business to sharpen its focus on artificial intelligence

Baidu, the Chinese search giant, is spinning out its business unit responsible for utility apps and its mobile ad business to sharpen its focus on artificial intelligence.

As part of the spin-out, Baidu is selling a large chunk of its equity in the ‘Global DU’ business to as-yet-undisclosed investors. The plan is to sell “a majority equity stake” in order to take Global DU independent. Once the deal is completed — it is targeted at a Q3 2018 timeframe — Baidu’s share of the business will drop to around 34 percent. Further, the business is likely to raise additional capital for growth.

Spinning out business units is commonplace among Chinese tech companies, Baidu itself recently did so with its financial services business.

Herman Yu, Baidu CFO, said this latest spin-out will give Global Du “autonomy and agility in its operation.”

It will also allow Baidu to focus more keenly on artificial intelligence. The firm said it will set up a new global business unit around its AI-powered services, including recommendation engine PopIn, keyboard app Simeji and other services in the U.S. and Southeast Asia. The plan is to allow these services to work more closely with Baidu’s AI labs, which include locations in Silicon Valley and Seattle.

Already, that push has helped Baidu’s earnings, which had been set back when the Chinese government invested internet advertising focused on medical services.

Despite the AI push, Baidu has suffered as key personnel departed over the past year.

Last week, Qi Lu, Baidu’s president and COO who is also its highest-ranking AI specialist, departed the company due to personal reasons. The exit was unexpected, particularly since the former Microsoft executive only took the role less than two years ago.

Prior to Lu’s departure, Baidu lost Andrew Ng — a globally recognized AI pioneer who set up its U.S.-based research labs — back in March 2017. Later in the year, the head of its Silicon Valley lab exited, too.

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