China’s Baidu has begun large-scale layoffs that could reshape its workforce structure, as the company faces intensifying competition in artificial intelligence and shrinking advertising revenue, six people with knowledge of the matter said, Reuters reported.
The reductions, which started this week, are expected to continue until the end of the year, marking one of the most extensive restructuring efforts undertaken by the search engine operator in recent times.
While the total number of employees affected remains unknown, the individuals described the downsizing as significant when viewed internally.
Two of them said specific business units may see workforce reductions reach as high as 40%, depending on performance indicators, strategic relevance, and resource allocation plans.
The cuts come shortly after Baidu reported a third-quarter loss on November 18.
The company has been under sustained pressure as its core advertising business continues to contract.
Third-quarter earnings reflected a second consecutive revenue decline, with overall revenue down 7% and online advertising revenue dropping 18% from a year earlier.
The quarter closed with a loss of 11.23 billion yuan, underscoring the headwinds facing the long-dominant search player.
Baidu did not respond to requests for comment on the layoffs or restructuring strategy.
Mobile ecosystem arm takes largest impact
Sources Reuters cited indicated that Baidu’s mobile ecosystem group will be the most heavily affected by layoffs, a sign of weakening monetisation in mobile search and exposure to competition from social media-driven ad platforms.
Advertisers have increasingly shifted spending to ByteDance’s Douyin and lifestyle platform RedNote, eroding Baidu’s core revenue streams that once powered years of expansion.
The company had 35,900 employees at the end of last year, already lower than the 39,800 recorded in 2023 and 41,300 the year before.
The current round of cuts suggests a more forceful drive toward cost rationalisation, project prioritisation, and a leaner operating footprint.
AI and cloud operations shielded as strategic priorities
Despite sweeping layoffs, roles linked to artificial intelligence and cloud technologies will largely be insulated, four of the sources said.
Baidu plans to redirect more resources into AI, signalling that long-term technological leadership remains its central ambition even as short-term profitability weakens.
Its Ernie large language model, once an early entrant in China’s generative AI race, is now trailing offerings from Alibaba and rapidly growing start-up DeepSeek.
Ernie Bot logged 10.77 million monthly active users in September, well below the 150 million users recorded by ByteDance’s Doubao service and 73.4 million for DeepSeek’s product.
Baidu’s AI roadmap has focused on integrating generative tools into its existing portfolio, including search, maps, and cloud services.
The company said earlier that more than half of its mobile search result pages now contain AI-generated content, reflecting a push to modernise user experience and sustain relevance in an increasingly algorithm-centric digital environment.
Industry-wide reductions mirror global technology realignment
Job cuts have become increasingly common across China’s internet sector as companies trim operations amid regulatory changes, slower consumer spending, and breakneck AI competition.
Alibaba and Tencent each slashed tens of thousands of jobs in 2022, while Amazon and IBM have announced layoffs across multiple geographies this year.
Baidu’s latest restructuring underscores an industry in transition, where profitability pressures are pushing companies to consolidate legacy businesses while wagering heavily on AI as the next growth engine.
Whether Baidu’s renewed focus on artificial intelligence will restore momentum remains uncertain, but the pace and scale of layoff activity suggest that the company sees transformation as unavoidable.
The post Baidu launches major layoffs as ad revenue falls and AI competition intensifies: report appeared first on Invezz