OpenAI Tests AI Search Capabilities as Baidu Enters the Competitive Arena

Numerous significant events have set the stage for a transformation in China's search market. OpenAI, well-known for its advancements in AI, is actively stepping into this realm with the introduction of its new product, SearchGPT. Released on July 25, SearchGPT aims to revolutionize AI search by providing quick and direct answers sourced from the latest available information on the internet. According to OpenAI’s CEO Sam Altman, the tool will not only answer user queries but also provide clear links to related sources.

What sets SearchGPT apart from traditional search products is its user-friendly design. Users can input fragmented keywords without worrying about grammar or formatting, making search more intuitive. Furthermore, its contextual memory feature allows for engaging back-and-forth interactions, enhancing the overall user experience.

OpenAI is collaborating with third-party content producers, including news agencies, publishers, and creators, indicating its strategy for building search results. This move places OpenAI in direct competition with established players in the market, such as Google and Microsoft Bing, intensifying the battle for dominance in the international search landscape.

In the Chinese market, the competitive environment is even more dynamic, with diverse players emerging to challenge traditional giants like Baidu. These challengers include new content platforms such as Douyin, Kuaishou, Bilibili, and Zhihu, which have rapidly developed their informational and service offerings. The emergence of new search capabilities, like Quark’s upgraded "Super Search Box" and Tencent's in-depth search feature, further illustrates the shifting landscape.

As a critical traffic gateway, search engines are fiercely contested by internet companies. Baidu, as the leading search service in China, is encountering increasing pressure from these new contenders. According to recent data, Baidu's market share had fallen to 55.85% by May 2024. Despite still having significant control over its search business, the evolving competition poses challenges for its revenue and profit margins.

In the first quarter of 2024, Baidu reported total revenues of 31.5 billion yuan, reflecting a minimal 1% year-on-year growth. Its core revenue grew by 4%, and online marketing revenue by 3%. In contrast, the overall internet advertising market saw a growth rate of approximately 4.6%, indicating that Baidu's growth is lagging behind other platforms such as Pinduoduo, Meituan, and Tencent, which have successfully carved out their share of the market.

Amid these challenges, Baidu is evolving its search capabilities towards generative AI, striving to enhance its search function through AI empowerment. Additionally, Baidu's long-term investments in smart driving initiatives are also moving towards commercialization. In the fast-changing landscape of market competition, the growth trajectories of various players are bound to shift, with their underlying motivations constantly being redefined.