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.

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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