Layoffs Hit All Tenures at Baidu as AI Inable to Stem Search’s Decline
Baidu is conducting a major workforce reduction affecting both new hires and veteran employees as China's search giant grapples with plunging core advertising revenue and massive write-downs on outdated AI infrastructure. The layoffs come amid intensifying competition in AI and autonomous driving that has left the company struggling to maintain its early-mover advantage.
The company posted a net loss of 11.2 billion yuan (about US$1.56 billion) in the third quarter, after writing down 16.2 billion yuan (about US$2.26 billion) in aging equipment no longer suitable for current AI computing requirements. This represents a dramatic reversal from a 7.6 billion yuan profit in the same period last year.
Search advertising revenue, Baidu's traditional cash cow, tumbled 19% year-over-year in the quarter, underscoring the erosion of the company's core business as younger users shift to platforms like Xiaohongshu and Douyin for information discovery. The deteriorating performance has prompted CEO Robin Li to restructure AI development reporting lines, sidelining Chief Technology Officer Wang Haifeng from core model research oversight.
Across-the-Board Job Cuts
The layoffs initiated on November 25 affected employees across multiple divisions, from recent graduates to staff with over a decade of tenure. Chen Chi, a fresh graduate who joined Baidu months earlier, was called into a meeting room and informed of termination within 10 minutes, with human resources managers urging immediate signing of severance agreements.
"HRBP said there was something important, and the important thing was that I was laid off," Chen said. The company offered what employees described as unusually generous severance packages, with five-year veterans receiving N+3.5 months compensation, including annual bonus conversion and signing fees.
Fu Yan, a five-year employee, noted the cuts spared few areas. "The company wants to change its workforce composition. Even ten-year veterans were laid off," he said. Internal sources indicated Baidu aims to complete the process by year-end, with layoffs described as indiscriminate cost-cutting affecting core business R&D teams alongside newer units.
Search Under Siege
Baidu's third-quarter results exposed deep structural challenges. Total revenue fell 7% to 31.2 billion yuan, marking the steepest quarterly decline. For the first nine months of 2025, revenue dropped 2.7% to 96.3 billion yuan, with net profit plunging to 3.8 billion yuan.
The company's search dominance has eroded as content platforms including Xiaohongshu, Douyin, WeChat and Bilibili wall off their ecosystems. "Xiaohongshu has guides, Douyin has reviews, and Baidu can't access this fresh content," Fu said. QuestMobile data showed Baidu's media status index fell to ninth place by June 2025, trailing platforms like Douyin and WeChat.
Baidu's own content initiatives have faltered. Haokan Video, once a pillar of its ecosystem, had just 30 million monthly active users as of September 2025, while Baijiahao, its content platform, has become plagued with low-quality material that undermines search credibility. Users increasingly view Baidu as a secondary option, with one source close to the search business noting some employees create fake accounts to inflate client metrics.
AI Ambitions Stumble
Despite being first to market with Ernie Bot, China's answer to ChatGPT, Baidu has fallen behind in the AI race. The Ernie app recorded just 19,000 downloads on Apple's App Store, compared to 890,000 for ByteDance's Doubao. QuestMobile ranked Ernie eighth among AI applications with 5.17 million monthly users, far behind Doubao's 159 million.
AI-related revenue reached approximately 10 billion yuan in the third quarter, up over 50% year-over-year, but AI application revenue including Baidu Wenku and Netdisk grew only 6% to 2.6 billion yuan. AI-native marketing services jumped 262% to 2.8 billion yuan, now representing 18% of core online marketing revenue, though a failed demonstration of Baidu's digital human technology at its November 13 World Conference raised fresh questions about execution capabilities.
Alibaba Cloud generated 39.8 billion yuan in quarterly revenue, exceeding Baidu's entire 31.2 billion yuan in total revenue by 8.6 billion yuan, highlighting the gap in cloud infrastructure.
Robotaxi Bright Spot
Apollo Go, Baidu's autonomous taxi service, delivered 3.1 million fully driverless rides in the third quarter, up 212% year-over-year, with weekly orders exceeding 250,000 in October. The service operates in 22 cities globally with cumulative mileage reaching 240 million kilometers.
However, scale has not translated to profitability. While sixth-generation vehicle costs dropped to 204,600 yuan from over 1 million yuan, daily operating expenses including maintenance and charging still exceed 100 yuan per vehicle when amortized over five years, against average fares of just 15 yuan per ride.
Competition is intensifying as Pony.ai surpasses 48 million test kilometers with plans for a thousand-vehicle fleet this year, while automakers including Xpeng and BYD leverage manufacturing advantages. No global robotaxi operator has achieved profitable scale.
Cost Cuts Meet AI Spending
"The money saved from laying off hundreds of people isn't enough to fund AI for one day," Fu observed. Third-quarter cost of revenue rose 12% year-over-year, driven largely by AI infrastructure investments. At the earnings call, CFO Junjie He described the 16.2 billion yuan write-down as a one-time adjustment to create a healthier balance sheet, projecting non-GAAP profit margins will recover in 2026 as efficiency improves.
CEO Li has restructured AI development, establishing Base Model R&D and Application Model R&D departments reporting directly to him. The move signals dissatisfaction with AI progress despite over 100 billion yuan invested since Li declared "All in AI" at the 2017 Baidu AI Developer Conference.
Baidu's market capitalization stood at 316.3 billion Hong Kong dollars at close on December 3, one-eighteenth of Tencent's value, with shares at HK$115，down from a peak of HK$250. The company faces the dual challenge of defending its eroding search business while financing capital-intensive AI and autonomous driving initiatives that have yet to generate sustainable returns.