Chinese tech giant Baidu, the country's dominant search engine operator, has initiated substantial workforce reductions this week that will continue through the end of the year. The dramatic cost-cutting measures follow the company's disappointing third-quarter financial results, which revealed significant losses and declining revenue.
Financial Strain Forces Drastic Measures
The layoffs come as Baidu confronts severe financial challenges. The company reported a net loss of 11.23 billion yuan ($1.59 billion) for the third quarter, marking the second consecutive quarter of declining revenue. Total revenue fell by 7% year-over-year during this period, highlighting the company's worsening financial position.
More alarmingly, Baidu's core online advertising business, which generates the majority of its income, experienced an 18% drop in revenue during the third quarter. This substantial decline in its primary revenue stream has forced the company to take aggressive cost-cutting measures, with workforce reduction being the most immediate solution.
Uneven Impact Across Business Units
The job cuts will not be distributed evenly across the organization, according to internal sources. The mobile ecosystem group (MEG) is expected to bear the brunt of the staff reductions, while roles connected to artificial intelligence development and cloud computing will be largely protected from the layoffs.
Perhaps most concerning for employees is the reported scale of cuts for some teams. Sources indicate that the layoff ratio may reach as high as 40% for certain departments, depending on their performance and business unit. The exact number of job losses hasn't been officially confirmed, but insiders describe the layoffs as significant in scale.
Baidu's workforce had already been shrinking in recent years. The company employed 35,900 people at the end of last year, down from its peak of 41,300 employees in 2022. The current layoffs will accelerate this downward trend in headcount.
AI Ambitions Face Stiff Competition
Despite protecting AI-related roles, Baidu faces significant challenges in the artificial intelligence sector. The company's Ernie large language model is struggling to maintain its early advantage against competing offerings from rivals including Alibaba and AI startup DeepSeek.
User adoption metrics reveal the competitive gap. The Ernie Bot app recorded just 10.77 million monthly active users in September, dramatically lower than the 150 million users reported for ByteDance's Doubao application. This substantial difference in user engagement underscores the competitive pressures Baidu faces beyond its core search advertising business.
The layoffs represent a strategic recalibration for Baidu as it navigates dual challenges: protecting its traditional search and advertising business while competing effectively in the rapidly evolving AI landscape. With the cuts expected to continue through December, employees across multiple departments face an uncertain future as the company restructures to address its financial pressures and competitive threats.
