Posing its first quarterly loss since its IPO in 2005, Baidu this week also announced the departure of Hailong Xiang, head of its search business.

The latter is a surprise to many, given that Xiang was seen as almost untouchable, just as the cash flow brought by his search business. It was rumoured that Lu Qi’s departure was related to his conflict with how some of the search revenue is generated.

A key controversy is that Baidu’s search results are heavily monetised, especially in the medical area, where illegal or improperly-run hospitals put up fake testimonials to attract desperate and unsuspicious patients and relatives.

However, search in China has been a dwindling business. Baidu tried many things, including O2O and AI, which either failed or are yet years away from proper monetisation. Its international efforts, which were among the earliest by any Chinese company, are in total disarray.

The company blames the challenging economic conditions SMEs in China are facing – as these SMEs, rather than brands, are the driving force of search advertising. Alas, it is hard to find any accurate data on this.

The quarterly performance is particular dismal compared to those of Tencent & Alibaba, both announced during this week.

Even these duo see their stock prices drop after the announcements – signifying the worries about the economy are probably very real.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.