Shares sink as analysts call for management reform
Domestic internet giant Baidu Inc will face a difficult time in pursuing its artificial intelligence (AI) ambitions after its leading AI expert announced he would step down. The company's management issues have triggered a series of high-profile exits in recent years.
Lu Qi, chief operating officer (COO), will leave in July due to family reasons, the company said in a statement on Friday. Meanwhile, Wang Haifeng has been promoted to senior vice president and general manager of Baidu's AI Group (AIG).
The news hit the company's shares on Friday, with the NASDAQ-listed company down more than 9 percent on daily basis.
"Baidu, especially its AI division, was thrown into turmoil in the wake of this news. Lu is a very important figure in the company's AI business, which is also a primary focus in Baidu's corporate strategy," Liu Dingding, a Beijing-based independent analyst, told the Global Times.
"Before he joined Baidu, he had experience in AI, which later became an asset for the search engine company," Liu said.
Lu's departure follows several exits of senior executives and engineers. In recent years, about 40 senior executives and chief engineers of Baidu's AI-related business divisions have left to start their new careers, domestic AI-focused news site leiphone.com reported on Saturday.
For example, former chief scientist and head of Baidu's AIG, Andrew Ng, stepped down in 2017 to launch his own start-up, Deeplearning.ai.
"Some AI experts studied and worked in the US, and they might face problems in a private Chinese company in terms of compensation or cultural integration," Yang Jing, industry expert and the founder of AI Era, told the Global Times on Sunday. "Those are part of Baidu's corporate management problems," she said.
Lu was considered a "firefighter" and "reformer" in Baidu, as he joined the company in the wake of a student's death from cancer in 2016. The search engine came under criticism for its bidding-for-ranking business model, according to media reports.
Wei Zexi was diagnosed with synovial sarcoma, a rare form of cancer, in 2014 and had been undergoing a controversial cancer treatment advertised on Baidu, but his treatment was unsuccessful and he died, according to Xinhua News Agency. Baidu was accused of being at least partly to blame for his declining health, Xinhua said.
Reforms began after Lu became COO. The company abandoned some activities such as food delivery and medical services, and carried out a corporate restructuring. It set up the AI technology platform system in March 2017.
Baidu's AI related technologies and applications have made progress over the past year. For example, it launched its driverless technology platform Apollo in April 2017, and realized closed venue tracking for autonomous driving in July.
"After Baidu shifted its focus toward AI, its market capitalization neared $100 billion. Leaving the company for family reasons is more like an excuse," Liu said, noting that Baidu's AI business may stall until the company finds a suitable replacement.
To tackle the management issues, Baidu should further streamline its administrative power to different business divisions, the analysts noted.
"Also, the company should effectively shift from profitability-driven to technology-driven," he said.
In the short term, Baidu will probably make its information flow business a priority while seeking other AI scientists to join the team, Yang said.