Baidu shuts mobile health care unit to focus on artificial intelligence
China’s dominant search engine operator Baidu has shut down its mobile health care business unit to refocus on more artificial intelligence-enabled healthcare research and innovation, as part of the Nasdaq-listed company’s latest efforts to restructure itself as an AI-first company.
Baidu said on Thursday that part of the two-year-old unit’s operation team will be merged into the group’s AI business and search business, while the rest of the operation will be shut down, effective immediately. Affected employees will be offered opportunities to transfer to Baidu’s other business units.
With the restructuring, the Beijing-based company aims to consolidate its core resources to focus on AI and upgrade its health care business from “providing low-end services to high-end AI-powered health care research and innovation”, Baidu said in an internal memo.
Kirk Boodry, an analyst with New Street Research, which has a “neutral” rating on Baidu’s stock, believes cost efficiency was behind the decision to cut the mobile health care unit.
“It was apparently underperforming relative to the company overall,” he said.
Since the health care business unit was set up in January 2015, it had been working on internet-enabled services, such as helping people make hospital appointments or consult doctors for medical advice online – services deemed as “low-tech“ by Baidu’s founder Robin Li Yanhong.
Li said in a forum on Wednesday that AI is able to “redefine” the health care industry. He envisioned that AI and big data technology could be used in genetic testing and even in developing and testing of new medicines. “The most important force to drive the revolution of health care is artificial intelligence,” he said.
The move is part of Baidu’s ongoing strategic restructuring, including the January hiring of former Microsoft executive Lu Qi, an expert in artificial intelligence, as its group president and chief operating officer, after the company’s core online advertising business took a big hit from a paid medical listing scandal last year.
A young cancer patient who died after seeking out an alternative treatment from a paid listing on Baidu’s site tainted the company’s reputation and triggered Chinese government’s tighter control over online advertising. Baidu’s health care business unit was not involved in the paid listing business.
Baidu has since been gearing up its efforts in AI, an area in which it holds advantages in technology and talent, which it has aggressively applied to driverless cars. In October 2016 Baidu also launched an AI-powered conversational bot for health care purpose.
The bot, named Melody, was designed to provide relevant information to doctors to assist with recommendations and treatment options.
However, analyst Boodry said Baidu has some serious challenges in terms of strategic positioning. “Growth in its core internet advertising business is slowing and competition from social media is increasing,” he said. “The company has good technology credentials but it is hard to monetise AI research. Over time, efforts like autonomous driving could be the way to do that but the business model has yet to be developed.”
Rex Wu, an analyst with Jefferies & Co, said in a recent report that “the tech world is shifting from a mobile era to an artificial intelligence era, driven by deep learning and big data”.
“The tech industry has started embedding cognitive AI in a variety of products. AI enables machines to identify, comprehend and act in applications ranging from autonomous driving to financial services (robot advisors) to health care (disease diagnosis, surgical robots),” the report said.