![]() Last September, it launched the $1.5 billion Apollo Fund for investments in driverless technologies. In late 2016, it established a $3 billion fund called Baidu Capital for internet-related investments. Lastly, Baidu has been setting aside lots of money for forward-thinking investments. With a first mover's advantage in this space, Baidu could eventually tether driverless vehicles to its O2O ecosystem, search engine, maps, and other cloud services - which would widen its moat against rivals like Alibaba and Tencent. The Chinese government wants semi-autonomous cars to account for half of all car sales by 2020, and for "highly" autonomous ones to account for 15% of the total by 2025. For example, it recently partnered with JD.com to allow users to directly buy goods from JD's marketplace from within the Baidu app.Īs a result, Baidu's mobile revenue continues to grow, accounting for 73% of its top line last quarter - up from just 64% in the prior year quarter. ![]() However, Baidu is fighting back by adding similar O2O services to its mobile app. These O2O (online-to-offline) services tether users more tightly to WeChat, and reduces their dependence on Baidu's search services. For example, Tencent is expanding (NASDAQOTH: TCEHY) WeChat, the most popular messaging app in China, into a single "super app" platform for mobile payments, games, ride hailing, deliveries, and other services. However, Baidu still faces the threat of disruptive ecosystems. That's why its online marketing revenues rose 22% annually last quarter, and its revenue per online marketing customer jumped 31%. This makes Baidu the 800-pound gorilla of the search market, and a likely first stop for online advertisers. Other rivals - like Qihoo 360's Haosou and Sohu's Sogou - hold single-digit market shares. Baidu's only real rival is Alibaba's (NYSE: BABA) Shenma, which currently controls 15% of the market.
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