In the final week of November, reports of mass layoffs across multiple departments at Baidu circulated on social media. Employees revealed compensation packages ranging from "N+1.5" to "N+3.5," with some including prorated year-end bonuses. The restructuring aligns with Baidu’s deteriorating financial performance.

The company’s strategic retreat appears calculated. In Q3 2025, Baidu Group reported total revenue of 31.2 billion yuan, down 7% year-over-year (YoY), with a net loss of 11.2 billion yuan and adjusted net profit of 3.8 billion yuan (-36% YoY). Its core business showed stark divergence: online marketing revenue—a major income source—fell 18% YoY to 15.3 billion yuan, marking six consecutive quarters of decline. Non-online marketing revenue grew 21% to 9.3 billion yuan, driven by cloud services.

Baidu’s search engine dominance has eroded as users migrate to platforms like Douyin, Kuaishou, Xiaohongshu, and Weibo, which integrate search functions within their ecosystems. Complaints about Baidu’s search quality abound, with users favoring alternatives like DeepSeek for higher-quality answers. A test search for "stomach discomfort" on Baidu returned ads for hospitals in the top results, highlighting its ad-heavy model.

Baidu App’s monthly active users grew just 1% YoY to 708 million in September 2025, per Q3 filings. QuestMobile data ranks Baidu ninth in advertiser preference, trailing rivals like Douyin and Taobao. Meanwhile, China’s online ad market expanded 6.4% YoY in Q3, with Tencent, Bilibili, and Kuaishou posting double-digit revenue growth.

Amid layoffs, Baidu shielded its AI and cloud divisions, signaling a pivot toward AI infrastructure (42 billion yuan revenue, +33% YoY), AI applications (26 billion yuan, +6% YoY), and AI-native marketing (28 billion yuan, +262% YoY). However, its AI app user base lags: Doubao (ByteDance) leads with 172 million MAUs, while Baidu’s Wenxiaoyan trails at 5.31 million.

CFO He Haijian disclosed cumulative AI investments exceeding 100 billion yuan since March 2023, with plans to ramp up spending. Despite AI’s potential to revive search ads and cloud growth, macroeconomic pressures and heavy R&D costs suggest Baidu’s turnaround remains distant.