What does Baidu's sale of its mobile business portend for its ability to integrate businesses?

At the end of March 2017, the Chinese search engine company told the U.S. Securities and Exchange Commission that it sold its mobile gaming business. Two companies took over Baidu's gaming business for CNY1.2 billion. Baidu has also renamed its gaming business to "Duokoo Game" and separated it for independent operation.

In July 2013, Baidu announced the full acquisition of 91 Wireless for USD1.9 billion, which was reportedly the largest acquisition in Chinese Internet history at that time. 91 Wireless is mainly engaged in mobile Internet application distribution and its core assets include 91 Mobile Assistant, Android app store, 91 mobile open platform, PandaReader, and a mobile gaming portal.

After acquiring 91 Wireless, Baidu's mobile business did not see much improvement. In 2014, Baidu integrated its Duokoo mobile game business with 91 Wireless game business to formally establish a Baidu-branded mobile game division.

Baidu has taken heat in the past year for not being nimble enough on its investments and acquisitions. It has been outpaced by rivals Tencent and Alibaba in gaining footholds in nascent sectors like artificial intelligence, and only recently has named new executives to run a revamped investment strategy for the company.

Ultimately, Baidu's future rests in how it has developed in a vacuum in the past. Because of protectionist policies, Baidu has not had competition, especially from foreign rivals like Google. And without competition, its services have not had to be the best. For example its search engine routinely does not deliver highly relevant results. And because its services have not had to be the best, its staff perhaps have not been trained to exceed expectations.

For Baidu to continue to do well in new sectors like AI, it should revamp its internal structure and "be hungry" in order to reach new heights.


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