Baidu will sell $1 billion of its stake in popular Chinese online travel agent Ctrip as competition for advertising revenue intensifies amid an economic downturn.

Why it matters: Baidu is turning its focus to artificial intelligence, autonomous driving, and cloud services as part of a general trend to offer more enterprise-facing services.

  • Diversification into these areas will require heavy investment, Baidu CFO Herman Yu said in an earnings call earlier this year.
  • Baidu reported its first quarterly loss since listing during the first three months of the year.

Details: Nasdaq-listed Ctrip will sell 31.3 million shares that are currently owned by Baidu, the company said in a filing. The shares make up around 30% of Baidu’s holdings in Ctrip.

  • The shares are worth around $1 billion and each represents 0.125 ordinary share of Ctrip.
  • After the sale, Baidu will remain Ctrip’s largest shareholder.
  • In 2015, Baidu took 25% of Ctrip through a share swap in which the search giant gave up shares in Ctrip-rival Qunar.

Context: Baidu has had a tough year resulting from the macroeconomic effects of the US-China trade war and increased government scrutiny of online content platforms.

  • The company has faced scandals related to medical ads on its platform and claims that it promotes results from its own services in its search results.
  • In July, Baidu apologized after posting a fake message in which the writer claimed to be the concerned father of a missing girl who was later found dead.
  • The company is increasing its focus on AI and autonomous driving. Baidu this week launched its robotaxi service in the central Chinese city of Changsha after announcing the initiative a year ago. Nonetheless, it will be a while until the company reaps financial rewards from the project, as Baidu is not currently permitted to charge for the rides it offers.

Chris Udemans

Christopher Udemans is TechNode's former Shanghai-based data and graphics reporter. He covered Chinese artificial intelligence, mobility, cleantech, and cybersecurity.

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