Chinese tech giant Baidu is making sweeping changes to its structure and workforce after a difficult fiscal quarter that left a deep dent in the company's finances. According to multiple internal sources, Baidu is making sweeping cuts and reshaping entire artificial intelligence teams in an effort to redefine its path in a period of increasing competition and the commoditization of large language models.
Layoffs in three major technology centers in China
Baidu has reportedly made layoffs in Beijing, Shanghai and Guangzhou, affecting critical business units such as the mobile ecosystem group — at the core of which lies the company's historic search engine — as well as cloud platform and smart technology divisions.
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Employees report that teams have seen a significant percentage of employees receive layoff notices. Notably, an employee in Beijing said that four of his nine team members were told they would be leaving in December, after individual meetings with human resources executives.
The compensation packages, according to information from employees, include one salary per year of service plus one to three months' salary, which was considered satisfactory by many, despite the difficulty of the decision. For many, this is the largest "staff restructuring" that has taken place at Baidu in recent years.
Economic pressure and the causes of cuts
Although Baidu had invested heavily in AI and saw its AI-related revenue grow by 50% in the third quarter, that wasn’t enough to offset the overall decline in profits. Total revenue for the period fell 7% year-on-year, mainly due to lower advertising spending in China amid an economic slowdown.
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The company reported losses of 11.2 billion yuan resulting from asset impairments, highlighting the need for immediate corrective action. In recent years, Baidu had already reduced its workforce, reaching 35,900 employees at the end of 2024, nearly 10% fewer than the previous year.
New AI structure: Two units, new leaderships, aggressive strategy
In an effort to regain its competitiveness, Baidu is completely redesigning its organizational model around Artificial Intelligence. According to a report by Jiemian, the company has created two separate units: one for the core fundamental models and one for their applications.
The new teams will report directly to CEO Robin Li, marking a move that echoes the strategies of DeepSeek and ByteDance, where younger executives are taking on critical roles to accelerate the pace of growth.
Changes are also being made to the popular AI application Ernie Bot (Wenxin), with the replacement of head Xue Su, in an effort to revitalize the platform that has lost ground in the market.
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Pressure from competitors: The battle of Chinese chatbots
Despite its initial lead, Baidu sees Ernie Bot falling to ninth place in monthly active users, behind strong players like ByteDance’s Doubao , DeepSeek ’s models , and Tencent ’s Yuanbao . Analysts, such as Morningstar’s Wang Kai, point out that the LLM market has now become “commoditized,” and Baidu needs to become more agile to stay relevant.
The future of Baidu: Adaptation or retreat?
The moves show a company in the midst of a strategic repositioning, aiming to strengthen its competitiveness in the most rapidly changing market the Chinese tech industry. With deep cuts, strengthening of AI departments and a leadership shake-up, Baidu is attempting to find its feet again.
