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Qi Lu speaking at Baidu AI Developer Conference in July, 2017. / Image credit: Baidu

On May 18, Baidu announced that its chief operating officer Qi Lu, a former Microsoft executive, would be resigning in July after a year and a half in the post.

Lu said in a company statement that he would retain his role as a vice president on Baidu’s board, though he could no longer work full-time in China “due to personal and family reasons.”

Some consider the shakeup a blow for Baidu. Shares of the Beijing-based firm plunged on the day Lu’s departure was announced. Credit Suisse downgraded its rating for Baidu’s stock, citing Lu’s role as “instrumental to Baidu’s transition to becoming an ‘all in AI’ company.”

This was echoed by Wang Yanbin, founder of a Chinese AI startup. He tells Tech in Asia that AI projects, unlike those based on “basic” information technology, involve longer-term development cycles.

“The loss of core talent will usually interrupt the execution and progress of AI projects,” he says.

Others point out that while Lu’s role was crucial, the impact of his departure will only be temporary. “Baidu’s AI venture is an ongoing, collective effort rather than a one man show,” Zheng Liyao, co-founder of Chinese AI research institute GGAI, tells Tech in Asia.

For example, Baidu had begun working on autonomous driving back in 2013. And although Lu oversaw on-the-ground implementation of Apollo, the firm’s open self-driving platform, CEO Robin Li claims that he first proposed the concept in the summer of 2016.

Lu’s arrival

Lu joined Baidu in 2016 in the aftermath of a damaging scandal, where a student died after purchasing dubious medical treatment advertised alongside Baidu’s search results. The incident triggered a massive public outcry and a government crackdown on Baidu’s in-search healthcare advertising. Online marketing has been a core revenue driver for Baidu in recent years.

Baidu marketing revenues

At the time, Baidu’s AI pivot was already underway, with star hires such as Andrew Ng, former head of Google Brain, and Jin Wang, former director for Google’s Shanghai research center.

“But most of Baidu’s AI efforts were staying at the conceptual, technological level prior to Lu’s presence,” argues Zheng. “The greatest contribution Lu brought to Baidu is the commercialization of AI.”

For one, Lu consolidated what used to be “fragmented” AI units under three overarching umbrellas: the intelligent driving group (IDG); the Apollo-led artificial intelligence group (AIG); and the smart living group (SLG) – managed directly by Lu himself – with an open platform for smart gadgets and Baidu’s own hardware. The restructuring was aimed at smoothening cross-department collaboration.

baidu leadership structure

All business groups reported to Qi Lu, who also served as general manager for SLG, the business group he initiated. / Graph by Tech in Asia

During Lu’s stint, advertising revenues continued to be Baidu’s holy grail because “AI takes longer to generate payoff at scale,” suggests Zheng. “But Lu has brought visible progress to AI’s business prospects.”

As of March, the Apollo platform has attracted 100 partners, according to Baidu. The firm also received one of the first government-issued licenses to test self-driving cars on open roads. Its smart speakers sold 10,000 units within the first minute of launch online, according to the firm, but the sector is crowded with contenders like Alibaba, JD, and Xiaomi.

[M]ost of Baidu’s AI efforts were staying at the conceptual, technological level prior to Lu’s presence. The greatest contribution Lu brought to Baidu is the commercialization of AI.

In the meantime, Baidu had also been shedding some of its non-AI assets – though it’s unclear to the public how involved Lu was in the deals. Baidu declined to comment on the matter.

In September 2017, Baidu’s food-delivery service was sold to Ele.me, which was itself acquired by Alibaba. In late April this year, Baidu secured US$1.9 billion for its newly spun-off finance arm. And this week, Baidu announced the spin-off of its global business unit.

The last deal “marked another milestone for Baidu to sharpen its focus on AI-powered core businesses,” said CFO Herman Yu in a statement.

Aside from straightening up business operations, Lu also attempted to flatten Baidu’s internal structure by holding monthly town halls where management must answer queries from the staff. A programmer recalled that Lu once spent an hour addressing a question he had posted on Baidu’s internal forum.

“He even brought along a few managers in charge of the search and feed features,” the employee wrote on Chinese Q&A platform Zhihu.

What’s next

A leadership shuffle has been announced. Noticeably, Li will resume the role of day-to-day operations which he had handed over to Lu. All business groups except for IDG will report directly to Li.

baidu leadership structure lu qi

Leadership reshuffle following Lu Qi’s departure. / Graph by Tech in Asia

“This is a sign that Baidu’s AI push is prioritizing smart living over autonomous driving, for the latter has a long way to go before reaching mass-market production,” observes Zheng.

Li acknowledged in front of staff that he’s seen many positive changes at Baidu since Qi joined last year. “I’m especially impressed by Qi’s integrity, dedication to work and sharp insights into technologies and businesses.”

He went on to reiterate Baidu’s commitment to its AI ambitions during the meeting. The search behemoth, which had become one of China’s top tech companies during the PC era, has fallen behind its peers in the BAT trio – Alibaba and Tencent – amid the mobile transition.

Tencent became the first Asian tech firm to reach the US$500 billion valuation mark last November, and Alibaba joined the club in January. Baidu’s market cap is less than US$80 billion.

But Li is confident that his company will lead China’s AI wave. “The Baidu era is coming back again,” he told his employees.

Currency converted from Chinese yuan. Rate: US$1 = RMB 6.39

This post A closer look at what Baidu COO’s exit means appeared first on Tech in Asia.

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