The move comes as Baidu aims to diversify its revenue streams in the face of tightening regulation
Chinese Internet multinational Baidu has entered into agreements to raise an undisclosed amount of funding in a Series A round for its lifestyle tech business division Smart Living Group, the company announced in a statement.
The deal puts Smart Living Group’s post-money valuation at RMB20 billion (US$2.9 billion), the statement noted.
Investors in the Series A round include China’s Citic Private Equity, Baidu’s venture arm Baidu Capital and Boston-based early to growth stage investor IDG Capital, the statement also said.
According to the statement, the deal is expected to be completed by Q4 2020. The funding will give the Internet company super voting rights in Smart Living Group, and the company will continue to consolidate Smart Living Group’s financial statements as a majority shareholder.
Smart Living Group is a smart home tech company that offers a DuerOS voice assistant solution as well as DuerOS-powered smart devices. DuerOS is a Baidu-developed open conversational artificial intelligence (AI) operating system.
DuerOS also features in Xiaodu, a smart speaker and smart earbuds product line. Earlier this month, the company unveiled an upgraded version of the operating system DuerOS 6.0 at Baidu World 2020, an earlier statement from the company announced.
“We are pleased to see the rapid growth of Smart Living Group since inception in 2017, to become a leading player in China (and globally) in the fast-growing voice assistant and smart devices market by leveraging Baidu’s AI capabilities,” Baidu Chairman and CEO Robin Li said in the statement.
“This transaction marks another milestone for Baidu to incubate new businesses with its leading technologies and strong synergies from Baidu Core, to capture large market opportunities,” Li added.
Baidu aims to diversify revenues
In its Q2 2020 results announced in August this year, the company noted that total monthly voice queries on DuerOS had reached 5.8 billion, a 57% surge from last year, of which 2.8 billion voice queries came from Xiaodu devices.
Moreover, the company noted in its quarterly results that the developer community for DuerOS had grown to over 42,000 developers, and its DuerOS skills store offered over 4000 cross-genre skills including education, video, online gaming and live streaming.
Li noted in the announcement that the company’s AI businesses, which include smart devices as well as cloud and smart transport, saw growth in double-digits in Q2, and were on-track to becoming an integral revenue source for the company in the future.
Baidu has been investing in its AI businesses in order to diversify its revenue streams in the long-term, and also reduce reliance on its search advertising revenue, which has been facing regulatory push back.
The Cyberspace Administration of China, China’s Internet watchdog, had tightened rules of search engines such as Baidu in 2016, requiring them to report banned content and verify advertisers’ qualifications. The move came after a government probe into Baidu due to a fatal mishap that was caused by a misleading advertisement on its search engine.
In 2017, the company came under the government’s radar once more after the cybersecurity regulator launched an investigation into its social network platform Tieba, along with Tencent’s WeChat and Sina’s Weibo, alleging that the companies had violated China’s cybersecurity laws.
The Internet giant announced in another statement earlier this year that the company had suspended updating content on certain newsfeed channels within its Baidu App from April 8, 2020. The company noted in the statement that the suspension was likely to have an impact on its revenues from its marketing services.
The statement also noted that the company would undertake additional measures, including enhanced monitoring and management of its platform, in order to comply with regulatory mandates.
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