About Baidu

Baidu, Inc. is a leading artificial intelligence (AI) company with strong Internet foundation. Baidu Brain, the company’s core AI technology engine, has enabled it to develop new AI businesses. The breadth and depth of the company’s AI capabilities provide the differentiating foundational technologies that power all of its businesses. The company is one of the very few companies in the world that offers a full AI stack of four layers, including cloud infrastructure, self-developed deep learning framework, large language models and applications. The company’s technological innovation in AI has been well recognized by the global community. For instance, ERNIE, the company’s knowledge-enhanced natural language processing framework, became the first AI model to score above 90 on GLUE (General Language Understanding Evaluation), which is widely considered as the benchmark for testing AI language understanding, and won the SAIL (Super AI Leader) award, the highest honorary recognition at the 2020 World Artificial Intelligence Conference. PaddlePaddle, an industrial open-source deep learning platform, was rated No. 1 in terms of usage in China, according to IDC in June 2022. The company has put its leading AI into innovative use. For example, the company is the first to receive driverless licenses in China and the U.S. and it has begun to offer fully driverless ride-hailing services on open roads in Wuhan and Chongqing since August 2022. For instance, the company’s natural language processing, an AI capability, enables the understanding of important details of a query, particularly in complex conversational queries. This helps optimize search results returned and increase the satisfaction rate of users. The widespread usage of the company’s open AI platform by developers and businesses creates a network effect for its AI technologies, products and services. PaddlePaddle developer community has grown to 5.35 million and has served 200,000 businesses, as of the end of 2022. Developers have created 670,000 models on PaddlePaddle by the end of 2022. The more developers and businesses use the company’s AI models, tool kits and services, the better its AI capabilities become, which in turn further increases the attractiveness of its AI platform to developers and business communities. This network effect helps the company obtain unique insights into different kinds of products and services that are in demand and have real-world application across different industries, setting a strong foundation for it to make investment decisions and lead with technology, products and services in the markets that it has entered. The company’s large portfolio of products and services is accessed by over one billion devices monthly, and its businesses span across an ecosystem of hundreds of millions of users, millions of developers and hundreds of thousands of enterprises. The company’s usage of a strong technology foundation to support an open platform business model not only draws participants into its ecosystem, but also adds richness and vibrancy to its ecosystem, strengthening the long-term prospect and vitality of its business overall. The company usually starts the development of a business with a strong technology platform, on which it builds products and services for its customers and users, and through an open platform architecture, it attracts a wide array of partners to its ecosystem to expand the offerings to its customers and users. The platform could then grow both organically and by leveraging the power of the company’s partners in the ecosystem, which over time feed into a virtuous cycle. Under an open-platform model, Baidu App continues to grow the company’s huge offering of third-party content and services, by leveraging its network partners of Baijiahao (BJH) Accounts, Smart Mini Program and Managed Page. The company’s decade-long experience with AI and the development of a powerful knowledge graph allows it to match user intent with long-tail, third-party content and services on its open platform. The company’s Mobile Ecosystem also includes a portfolio of over one dozen apps, including Baidu App, Haokan and Baidu Post, providing a platform for people to discover and consume information through search and feed, interact and engage with creators, publishers, service providers and merchants. This native-app like experience from user acquisition to user relationship management to closed loop transactions demonstrates the company’s value to merchants, enabling them to perform user life-time management on its platform, and has made Baidu App a leading online marketing services provider for both search and feed. Within its Mobile Ecosystem, the company serves more than half-a-million customers by enabling them to tap into its massive user base. The company monetizes primarily through offering comprehensive and effective marketing services to fulfill its customers’ needs. The company generates revenue primarily from providing search, feed and other marketing services, which account for a majority of its total revenues in 2022. The company has made extensive use of AI technologies to develop innovative marketing services, such as dynamic ads, which recommend products from its marketing customers most fitting to each search user. The company’s marketing cloud also provides innovative AI capabilities to its marketing customers, so that users can still make product inquiries during non-business hours and Baidu Brain can automatically carry a conversation with users to facilitate transactions. In addition, the user engagement and user logins that have developed on its platform are enabling it to diversify monetization beyond online marketing into other services, such as Baidu Health. The company’s AI Cloud includes two parts: enterprise and public sector cloud, and personal cloud. The company’s enterprise and public sector cloud offer a full suite of cloud services and solutions, including IaaS (infrastructure as a service), PaaS, and SaaS, and is differentiated by its AI solutions. Leveraging Baidu Brain, the company’s AI solutions provide customers and developers with a comprehensive library of modularized solutions, including open source codes, pre-trained models, end-to-end development kits, tools and components. In addition, the company’s AI Cloud customers can leverage its large library of key AI capabilities, such as knowledge graph, speech recognition and synthesis, natural language processing and computer vision. The company’s products and services, such as EasyDL, a no-code toolkit on PaddlePaddle that helps users without programming skills build customized machine learning models with a drag-and-drop interface, and BML Baidu machine learning, a full-featured AI development platform for AI algorithm developers based on PaddlePaddle, make it easier for customers to use deep learning and machine learning to solve real world problems, and its cloud services are formulated to serve across different industries, including transportation, manufacturing, the public sector, energy and utilities, financial services, and Internet/media. The company’s Intelligent Driving & OGI consists of promising businesses in development with huge market opportunities, and some are at early-stage commercialization with a growing customer base. The company is a market leader in intelligent driving and smart devices, and it is pursuing these large growth opportunities by leveraging its unique AI capabilities, data insights and internally developed chips. Apollo Go, which provides autonomous ride-hailing service, is open to the public in more than 10 cities in mainland China. In 2022, Apollo Go provided more than 1.5 million rides. The accumulated rides provided to the public by Apollo Go exceeded 2 million by the end of January 2023. In Beijing, Apollo Go has begun to charge fees for the autonomous ride-hailing services on open roads since November 25, 2021, and was granted the permits to charge fees for the driverless ride-hailing services on public roads on July 20, 2022, with no safety officer behind the steering wheel. On December 30, 2022, Apollo Go received Beijing’s first license to test vehicles with no driver or safety operator in the car, taking Baidu one step closer to providing fully driverless ride-hailing service on public roads in the capital city. In Chongqing, Apollo Go has begun to charge fees for the autonomous ride-hailing services on open roads since February 18, 2022, and started offering fully driverless ride-hailing services on open roads and started charging passengers for fully driverless ride-hailing services on open roads on August 8, 2022. In Wuhan, Apollo Go started offering fully driverless ride-hailing services on open roads and received the permits to collect fees from the passengers on August 8, 2022. Apollo is a well-recognized brand among automakers. The company has partnered with many domestic and global automakers to power their passenger vehicles with Baidu Apollo’s auto solutions. The company’s self-developed AI chips are customized for Baidu Brain and specific AI usages to improve performance and reduce costs. iQIYI produces, aggregates and distributes a wide variety of professionally produced content, as well as a broad spectrum of other video content, in a variety of formats. The company has built a large and strong portfolio of products and services to give Baidu the scale necessary to invest heavily in technology, while optimizing its future for sustainable long-term growth. The company derives significant synergies by incorporating the AI developed for search into other parts of its business. For example, large daily use of the company’s visual search and voice search may be used to improve Apollo sensing capability and DuerOS speech recognition capabilities. The company’s operations are primarily conducted in mainland China. For the year ended December 31, 2022, more than 97% of the company’s group’s total revenues were generated from mainland China, and as of December 31, 2022, more than 76% of its group’s total assets were based in mainland China. Baidu Core Baidu Core—Mobile Ecosystem Baidu Mobile Ecosystem provides a platform for people to discover and consume information through search and feed and facilitate interaction and engagement among users, creators, service providers, and merchants, alike. In particular, the company’s ecosystem allows merchants, creators, publishers and service providers to acquire users, interact with users by provide information, content, products and services, and transact with users. This marketing funnel approach from user acquisition to user engagement to monetization demonstrates the company’s value to merchants, allowing them to build a life-time relationship of users. In addition, this platform-centric approach has enabled its Mobile Ecosystem to start diversifying commercialization beyond online marketing into other services. Products and Services for Users Baidu App: The company’s flagship app enables users to access its search, feed, content and other services through mobile devices. Baidu App offers twin-engine search and feed functions that leverage the company’s AI-powered algorithms and deep user insight to offer users a compelling experience. Through the building blocks of BJH accounts, Smart Mini Program and Managed Page, Baidu App provides users with single log-on, native-app-like experience to a wide range of information and services dispersed across isolated mobile apps and HTML5 websites, as well as merchants a full suite of marketing cloud services. Baidu App’s spanning mobile ecosystem has resulted in more users logging in. In December 2022, MAUs of Baidu App reached 648 million and daily logged in users surpassed 80%. Baidu Search: Users can access the company’s search and other services through Baidu’s properties and Baidu Union partners’ properties. In addition to text inputs, users can conduct AI-powered voice search and visual search. Voice search integrates speech recognition and search technologies to enhance the user experience by providing a more natural and convenient input modality. Visual search enables the use of smart phone cameras to capture images and retrieve related content and services on the Internet. For example, users can take a photo of a plant or a pet, to identify the species. The company also endeavors to improve the search experience, through other AI-powered products, such as Top 1, to satisfy user queries with the first displayed search result, which will be an important capability with the adoption of smart devices with smaller screens. In addition, the company offers vertical search, such as video search and online literature search to its users. Baidu Feed: Baidu Feed provides users with personalized timeline based on their demographics and interests. Baidu Feed complements the company’s core search product, leverages Baidu AI recommendation algorithms and monetization platform, and contributes to user engagement and retention, including content sharing, likes, and comments. Baidu Feed provides text-to-speech function to help users consume Internet content hands free, as well as leverages its large traffic to distribute video content from Baijiahao, Haokan, iQIYI and third parties. Baidu Health: Baidu Health helps users find the doctor and hospital that best suit their different healthcare needs through the company’s AI building blocks. By doing so, Baidu Health provides doctors and hospitals more efficient online presence through Baidu Healthcare Wiki short-term videos, live streaming seminars and telemedicine, as well as providing them with hosted management tools to remain in contact with their patients efficiently, such as messaging, appointment, re-scheduling and monitoring of treatment plans. Haokan: Haokan offers a wide variety of user generated and professionally produced short videos, usually several minutes long, in coordination with MCNs (multiple channel network). Haokan allows users to upload, view, search, rate, share, favorite, comment, and follow. Video creators and curators can distribute their content to build a fan base and receive revenue share for their content contribution. Internally Developed Knowledge-and-Information-Centric Products: The company’s content and services ecosystem also includes a comprehensive portfolio of knowledge and information products developed internally, in partnership with professionals, reputable organizations and other users. For example, the company provided live streaming content from healthcare industry experts in 2020, to help users better understand and cope with the COVID-19 pandemic. Baidu Wiki: A leading wiki in China compiled by experts in specialized fields featuring high-quality columns and videos, such as Encyclopedia of Intangible Cultural Heritage, Digital Museum and Recorder of History. Baidu Knows: An online community where users can pose questions to other users, such as individuals, professionals, and enterprises. Baidu Knows leverages Baidu’s search capabilities to help users find answers to their questions on the Internet fast and efficiently, while at the same time allow various partners of Baidu Knows to engage with their targeted users. Baidu Experience: An online platform where users share daily knowledge and experience, providing practical tips and interesting perspectives in areas, such as software, lifestyle, and games, etc. Baidu Post: A social media built on topical online communities. Users can post text, image, audio and video content and reply to original curation, forming valuable discussion groups. Baidu Post draws new users through close integration with search and user generated content, and has been a popular platform for celebrity fans, online game players, and online novel readers to share topical discussions, especially about current trends. Products and Services for Partners The company attracts numerous partners to its platform through its AI building blocks and Baidu Union, which help create opportunities for it to work with its partners in research and development and other business cooperation and establish long term business relationships. AI Building Blocks: The number of smartphones sold in China is on a decline and app installation costs have been rising, causing app developers to take interest in offering their content and services on Baidu App with native-like app experience. Similarly, website owners are experiencing the challenge to grow their business while open in-app search queries are outgrowing browser search queries. To help app developers and website owners grow their business and leverage their traffic more efficiently with AI-powered tools and capabilities, the company offers Smart Mini Program and Managed Page to its partners, respectively. The company also offers BJH accounts to enable content providers to place their content on its publisher network and make their content searchable. Baijiahao (BJH Accounts): The company’s publisher network aggregates articles, photos, short videos, live videos, and augmented reality clips from MCNs, media outlets, and other professional sources, for distribution through search, feed, and short video products. Smart Mini Program (SMP). App developers may share their content and services in Baidu App with native-app like experience through increasingly popular applets, known as Smart Mini Program. Users can search for and access content and services that historically were only available in standalone apps within Baidu App, without having to download and maintain so many apps on their phones. Managed Page: Managed Page is a hosted mobile alternative for website owners. Site owners may open an account on the company’s platform, use its tools and services powered by AI and engage with users without having to maintain their own site and pay for server, software and bandwidth costs. Managed Page comes with industry-specific templates and is designed to provide users with more reliable and secure information. Managed Page reached 45% of Baidu Core 2022 online marketing revenue. Baidu Union: The company matches the promotional links of its online marketing services customers to the online properties of Baidu Union partners, which consists of a large number of partners, such as third-party websites, wap sites and mobile apps. Some Baidu Union partners, such as online portal websites and Internet cafes, also embed the company’s products and services, such as Baidu Search or a search function powered by Baidu Search, onto their online properties, which allows Baidu Union partners to provide high-quality, relevant search results to their users without incurring the cost of development and maintenance for advanced search capabilities and monetize their traffic through revenue sharing arrangements with it. Baidu Union partners may use the company’s content recommendation system to provide feed content and ads to their users. The company typically pays its Baidu Union partners a portion of the online marketing revenues based on pre-arranged agreements. In addition, the company enters into arrangements with Baidu Union partners to provide its search engine in their browsers. The company typically pays such Baidu Union partners a fee based on prearranged agreements. Products and Services for Customers The company, through its network of third-party agents and its direct sales team, deliver online marketing services to a diverse customer base consisting of SMEs across industries, including healthcare, retail, e-commerce, entertainment and media, online games, business services, life services, and transportation. In 2022, the company served more than half a million enterprise customers, who are customers of its online marketing services. The company’s online marketing services enable the delivery of comprehensive, rich, and diversified marketing offerings to fulfill customer needs. The company’s online marketing services include P4P (pay for performance) services and others. The company generates revenues primarily from the sale of P4P online marketing services and other marketing services to its customers. P4P: The company’s auction-based P4P services allow customers to bid for priority placement of paid sponsored links and reach users who search for information related to their products or services. The company charges its customers on a cost-per-click basis. Customers may choose to purchase search, feed and other online marketing services and have the option to set daily allowances targeting users by geography in China and specify the time period for their campaign. As its partners adopt Smart Mini Programs and Managed Page, some of them have begun to use these properties as their landing page, in lieu of their own mobile apps and websites. Search marketing services are mainly provided to customers through the company’s proprietary online marketing system which drives monetization efficiency by improving relevance in paid search and optimizing value for its customers. Feed marketing services usually comprise image-based or video-based advertising, appearing between the feed headlines or within the feed content. It is powered by Baidu AI in order to better match goods and services providers with their targeted audience while optimizing user experience. Others: The company’s other marketing services comprise display-based marketing services and other online marketing services based on performance criteria other than CPC (cost-per-click). Customers can choose different mix of the company’s service offerings to optimize their return on investment. BrandZone allows customers to display integrated text, logo, image, and video in a structured and uniform manner on a prominent position of the search result page or in vertical search products, such as Baidu Knows. Programmatic marketing platform supports the placement of advertisement using standard, intelligent, or customized creativity, different purchasing methods (guaranteed delivery or real time bidding), and multiple payment methods. Marketing Cloud Platform: The company’s marketing cloud platform integrates one-stop-shop media purchase with CRM (client relationship management) functionalities, to allow its customers to purchase brand and performance-based marketing services, build audience and user engagement, generate leads and maintain relationships with users, leveraging tools and services powered by Baidu AI. The company’s marketing cloud platform helps it better understand its customers’ needs and enable its customers to leverage Baidu’s AI to simplify their marketing process and improve the effectiveness of their marketing efforts. The company’s Mobile Ecosystem, built upon Baidu App, as well as a dozen other apps, offers a wide range of third-party content and services to hundreds of millions of users, typically free of charge. The company’s AI building blocks and other products and services for partners have attracted millions of partners to become participants in its Mobile Ecosystem and generate content and services onto its platform and to tap into its over-half-a-billion user base. For its Mobile Ecosystem business, the company generates a substantial majority of its revenues from the provision of online marketing services to its customers through both direct sales and third-party agents. The company charges its customers periodically based on usage while requiring certain customers to pay a deposit. The company also offers certain customers credit terms. In addition to offering ads on its platform, the company serves promotional ads from its customers on the apps or website properties of Baidu Union partners. The company also powers the search engines of Baidu Union partners. Baidu Core—AI Cloud The company’s AI Cloud includes two parts: enterprise and public sector cloud solutions, and personal cloud service. The company’s enterprise and public sector cloud solutions offers a comprehensive set of cloud services and solutions, including IaaS, PaaS (platform as a service) and SaaS, based on its unique AI capabilities Combined with its effective marketing capabilities, it has been able to demonstrate the ability to cross-sell and up-sell additional products and services to existing customers, which in turn enables it to more efficiently grow its cloud business. Baidu was once again ranked the No. 1 AI Cloud provider, according to IDC’s first half of 2022 report on China’s public cloud market for the fourth consecutive year. The company’s AI Cloud includes two parts: enterprise and public sector cloud solutions, and personal cloud service. For enterprises and public sector, the company offers IaaS, PaaS and SaaS (software as a service), profited from its unique AI capabilities, to various customers. Enterprises and the public sector have been the growth engine for the cloud revenue, consistently outgrowing the overall AI Cloud business. The company’s IaaS provides its customers the flexibility to quickly scale or cut back on their cloud computing needs without having to provide huge capital layout upfront. The company’s IaaS business benefited from multi-cloud strategies adopted by many of its customers. The company also provides enterprise customers with cloud solutions, usually consisting of PaaS and SaaS, that leverage the unique AI capabilities from Baidu Brain. For example, the company enabled a client in the manufacturing sector to automate quality assurance checkpoints on its production line by leveraging its computer vision capabilities. In the transportation industry, the company is a pioneer and industry leader in developing V2X (vehicle-to-everything) solutions, the infrastructure backbone to smart transportation, to cities in China to help them improve municipal traffic condition, air pollution and road safety, using Baidu AI technology. As of December 31, 2022, Baidu ACE smart transportation had been adopted by 69 cities. The industry know-how from the company’s existing businesses, such as its Mobile Ecosystem and iQIYI, also provides valuable insights on how to tailor AI Cloud solutions to customers in the technology and media industries. For the personal cloud service, the company offers Baidu Drive, which allows users to store and retrieve photos, videos, and other files on AI Cloud, along with other capabilities, such as group share and data transfer. Personal cloud service contributed a small portion of total cloud revenues, and has been growing more slowly than the overall cloud revenues. For AI Cloud, the company generates revenue by providing cloud services and solutions to enterprise clients, consumers and the public sector directly or through solution integrators for a lump-sum fee or on a subscription basis. The company also generates revenue from Baidu Drive from membership services provided to individual customers. Baidu Core—Intelligent Driving & OGI Intelligent Driving & OGI include developments with large total addressable markets and earlier-stage commercialization with a growing customer base, including Apollo intelligent driving and DuerOS smart assistant. Intelligent Driving Intelligent driving, including Baidu Apollo auto solutions (Apollo Self-Driving Services and DuerOS for Auto), robotaxi fleets (autonomous ride-hailing service) and intelligent EVs, leverage AI and other technologies to make a vehicle, or fleet of vehicles, more intelligent, all with the ultimate goal to be autonomous. The company is the market leader in autonomous driving in China in terms of number of rides Apollo Go completed. The industry definition for L4 autonomous driving is that the vehicles are capable to drive themselves without human interactions but will be restricted to known use cases, or in most environments and road conditions. Apollo Go has already received permits for providing driverless ride-hailing services on open roads and received the permits to collect fees from the passengers in Chongqing and Wuhan. A well-known research firm, names Apollo as one of the four global leaders in autonomous driving, recognizing the company as the top-tier autonomous driving company from China. In addition, the services and solutions of intelligent driving are compatible with its smart transportation solutions, which leverage each other to gain a better understanding of traffic and road conditions, as well as to improve cost efficiency. Baidu Apollo’s auto solutions (Apollo Self-Driving Services and DuerOS for Auto): The company has been investing in autonomous driving technology to provide automakers with self-driving services. Under Apollo Self-Driving, it offers HD Map, AVP (automated valet parking) and ANP (Apollo navigation pilot). The company introduced AVP (automated valet parking) services in 2018, which allow a driver to get out of the car upon arrival at his or her destination and its solution would enable the vehicle to autopark, and to direct the vehicle to automatically drive to driver’s location out of the parking lot. In December 2020, the company introduced ANP (Apollo navigation pilot) services, which leverage its autonomous driving capabilities. In the past years, Baidu Apollo’s auto solutions continued to gain traction among leading automakers. These products are in the early stage of monetization and their revenue contribution is insignificant. Apollo Go, the company’s robotaxi. Robotaxi fleet operation represents a massive opportunity. Apollo Go is available in more than 10 cities, including all the tier-1 cities (Beijing, Shanghai, Guangzhou, Shenzhen) and other major cities. Luobokuaipao, the mobile application of Apollo Go, is available for download for free from all the major app stores in China. In 2022, Apollo Go provided more than 1.5 million rides. The accumulated rides provided to the public by Apollo Go exceeded 2 million by the end of January 2023. In Beijing, Apollo Go has begun to charge fees for the autonomous ride-hailing services (with safety officers behind the steering wheel) on open roads since November 25, 2021 and Apollo Go was granted the permits to charge fees for the driverless ride-hailing services (with safety officers in the vehicles, but not behind the steering wheel) on public roads on July 20, 2022. In Wuhan and Chongqing, Apollo Go started offering fully driverless ride-hailing services on open roads and received the permits to collect fees from the passengers on August 8, 2022. Apollo Go received Beijing’s first license to test vehicles with no driver or safety operator in the car on December 30, 2022, taking Baidu one step closer to providing fully driverless ride-hailing service on public roads in the capital city. In June 2021, the company introduced Apollo Moon, 5th generation Apollo robotaxi vehicles. In July 2022, the company unveiled its 6th generation robotaxi vehicle Apollo RT6. RT6 is the first steering wheel-free, all electric model designed for fully driverless autonomous driving. Apollo RT6 is distinct from the previous generations that had otherwise been retrofitted on conventional vehicles. Baidu Maps. A voice-enabled mobile app providing users with travel-related services, including POI (point of interest) search, route planning, precise navigation, taxi-hailing service and real-time traffic condition information. Baidu Maps also provides professional and stable map services to business partners across different sectors. In 2022, the company integrated Baidu Map into its Intelligent Driving Group to create synergies between the Baidu Map app and the map solutions for the auto and transportation industries. Intelligent EVs: The company formed a new EV as a joint venture, Jidu Auto, that it established with Geely. The company entered into a strategic partnership with Geely in January 2021. The company will provide intelligent driving capabilities to power the passenger vehicles, and Geely, which holds the distinction of best-selling Chinese automobile brand in past years under the Volvo and Geely brands, will contribute its expertise in automobile engineering and manufacturing. In June 2022, Jidu Auto launched its first car model, Robo one (Robo-01). At the Guangzhou Auto Show in December 2022, Jidu Auto showcased the mass-produced edition of Robo one (Robo-01). Robo one is equipped with Baidu’s most advanced autonomous driving solutions in the market, such as Baidu’s ANP, AVP, as well as its advanced infotainment system. In addition, Jidu Auto also introduced its second car model at the Guangzhou Auto Show in December 2022. OGI DuerOS Smart Assistant: DuerOS is a leading smart assistant for the Chinese language, which powers first-party Xiaodu home smart devices and smart earphones, as well as third-party smart phones, children smart watches and story machines. DuerOS is differentiated by its multi-round conversation AI capabilities, leveraging internally designed Baidu Honghu AI chip, as well as by DuerOS skills store, which offers thousands of skills in wide ranging genres, including short and long videos, online games, education services, video conferencing and other visually oriented activities. In August 2021 and September 2022, Xiaodu completed two rounds of Series B financing at a valuation of US$5.1 billion with the company retaining super-majority shareholding. While it generates revenue primarily from the sale of the company’s smart assistant devices to its customers directly and through its distribution network, Xiaodu services revenue, such as membership and advertising, already surpassed 12% of Xiaodu revenues. iQIYI iQIYI is a leading provider of online entertainment video services in China. iQIYI’s platform features a variety of premium video content, in particular iQIYI original dramas and shows. iQIYI also expands its premium content offering through licenses and collaboration with third-party partners, which supplement its original content. Since the beginning, iQIYI has always put content and users at the center, orienting each of its business strategies around delivering superior content quality and user-friendliness. Artistically crafted and imbued with industry expertise distilled from over a decade of operational experience, many iQIYI original titles have secured their places among the most successful IP franchises in the history of Chinese popular entertainment. Designed and refined by its engineers with a deep understanding of the evolving user preferences, iQIYI’s products continue to offer superior entertainment experience for users. With in-house studios spearheading its original content production, iQIYI is home to many acclaimed original drama series and variety show franchises, and has successfully serialized iQIYI’s original content into blockbuster sequels to accumulate and amplify IP value overtime. iQIYI also expands its premium content offering through licenses and partnerships, which supplement its original content. Professionally Produced Content (PPC) iQIYI’s PPC mainly includes original content and licensed content. As of December 31, 2022, iQIYI had over 40,000 PPC titles in iQIYI’s comprehensive and diversified video content library, comprised of drama series, variety shows, films and others. Original Content. iQIYI’s original content includes content produced in-house and content produced in collaboration with quality third-party partners. iQIYI’s original content titles include popular drama series, such as Love Between Fairy and Devil, Chasing the Undercurrent, New Life Begins, and Wild Bloom, all of which were launched in 2022 and broke the landmark 10,000 iQIYI popularity index score; popular variety shows, such as The Big Band, Qipa Talk, The Rap of China and Super Sketch Show high-quality movies, such as Mirrors and Feathers, Tough Out, Break Through the Darkness and Northeastern Bro; and popular animations, such as Deer Squad, The World of Fantasy and Love Between Fairy and Devil. iQIYI obtains the IP through production, adaptation or purchase from third parties, while the partners, typically established entertainment production companies, are responsible for content development and production. iQIYI maintains a high degree of control during the content development and production process. iQIYI also adapts high-quality video IP into multiple entertainment products, such as online games, animations, online literature, and derivative merchandise. Licensed Content In addition to original content, iQIYI provides users with a curated selection of high-quality PPC from third parties. Leveraging iQIYI’s expertise in content selection, iQIYI has successfully debuted well-received titles such as drama series iPartment, In the Name of People, Go Go Squid, My Heroic Husband, A Lifelong Journey and variety show Keep Running. iQIYI’s licensed content library also features a rich collection of movies, animations, documentaries and other content. iQIYI licensed video content is typically produced at fixed rates for a specified term. The average term of licenses varies depending on the type of content, with films and drama series having an average term of nine years and thirteen years, respectively. Payments of licensing fees are generally made in installments upon signing of the contacts and during the license period. iQIYI also exchanges rights to distribute licensed content with other online video streaming services to enrich its content library. In certain cases, iQIYI has the right of first refusal to purchase new content produced by the licensor. iQIYI leverages its content procurement team’s insights and its AI-based big data analytics capabilities to optimize content procurement. iQIYI has established strong partnerships with content providers to ensure access to high-quality content. These partners include leading domestic drama series production companies, film production companies and TV stations, “Big Six” Hollywood production studios, top TV networks in the U.S., etc. Other Video Content.: QIYI offers a broad base of other video content with all kinds of genres, formats, and lengths of duration, such as internet movies and dramas, mini variety shows and animations, vertical or horizontal videos, as well as grassroot or influencer uploaded videos, edited video clips, and video blogs, or Vlogs, among others. iQIYI’s other video content expands its library and allows it to capture a broader user base, drive user engagement and enhance user stickiness. iQIYI has developed a diversified monetization model. iQIYI generates revenues through membership services, online advertising services and a suite of other monetization methods. iQIYI’s monetization model fosters an environment for high-quality content production and effective content distribution on its platform, which in turn expands its user base and increases user engagement, creating a virtuous cycle. Membership Services. iQIYI’s membership services generally provide subscribing members with superior entertainment experience that is embodied in various membership privileges. iQIYI’s membership program is composed of multiple packages, each offered at a different price and provides subscribing members with access to a large collection of VIP-only content consist of drama series, movies, animations, cartoons and online literature, earlier access to certain content aired on iQIYI platform and a bundle of viewing functions and features. For example, the members-first model of The Lost Tomb enabled members to gain instant access to the entire season while non-paying users could only follow weekly updates for new episodes; and certain auxiliary content of was accessible exclusively to iQIYI’s members. iQIYI’s members primarily include subscribing members and, to a lesser extent, users who gain access to its premium content library through paid video-on-demand service. Online Advertising: The prices of iQIYI’s advertising services depend upon various factors, including form and size of the advertising, level of sponsorship, popularity of the content or event in which the advertisements will be placed, and specific targeting requirements. Prices for the brand advertising service purchased by each advertiser or advertising agency are generally fixed under sales contracts. Content Distribution: iQIYI sub-licenses content within its authorized scope to TV stations and other internet video streaming services. iQIYI also enters into barter agreements to exchange internet broadcasting rights of licensed content with other internet video streaming services. The barter agreement provides the licensee with the right to broadcast the licensed content, and the licensor retains the right to continue broadcasting and/or sub-licensing the exchanged content. The company distributes its selected content not only to third-party platforms in mainland China but also to regions outside of China. Others. Other monetization models include online games, IP licensing, talent agency, online literature, other licensing and others. Technology The company focuses on technology and innovation. To stay at the forefront of the internet industry and to achieve long-term growth and success, the comopany invests heavily in research and development. The company has established several research labs in China and the United States, to enhance its research and development capabilities, including AI, quantum computing and other areas. Baidu AI The company has been investing in AI since 2010, and has developed Baidu Brain, its core AI technology engine, which has become a powerful technology platform that powers all of its business. The company has opened up its AI platform to a large community of developers, which helps improve its AI capabilities and accelerate large-scale implementation of its AI. Request on Baidu Brain has peaked over 1 trillion hits per day in 2022. By doing so, the company is turning the world’s most advanced AI capabilities into platforms for customers, developers and partners. The company’s AI capabilities encapsulated on Baidu Brain consist of four layers and one module, as follows: a foundation layer, consisting of PaddlePaddle, the company’s open source deep learning framework and platform, as software, Kunlun AI chips as hardware and databases as fuel; a perception layer, aggregating internally developed algorithms for speech recognition and synthesis, computer vision and augmented reality & virtual reality; a cognition layer, consisting of algorithms for natural language processing and knowledge graph; a platform layer, opening the company’s technologies to partners and developers to develop a strong AI ecosystem; and an AI security module that ensures Baidu Brain’s security, safety and privacy. AI Capabilities. Baidu Brain enables integrated innovation and expands the usage of AI solutions in a wider range of industries. Baidu Brain first launched as a platform in 2016, and the company launched Baidu Brain 7.0, the latest version of Baidu’s open AI platform, in August 2021. Baidu Brain 7.0 demonstrates the company’s expertise in AI technologies and industrial practice, and its efforts to make AI technology more accessible. Baidu released ERNIE 3.0 Titan, a pre-training language model with 260 billion parameters. ERNIE 3.0 Titan is trained on a vast knowledge graph and massive unstructured data. ERNIE 3.0 Titan has achieved SOTA outcomes in over 60 NLP tasks, including machine reading comprehension, text categorization, and semantic similarity, among others. The model also performs well in 30 few-shot and zero-shot benchmarks. This shows that it can generalize across various downstream tasks with a small quantity of labeled data and decrease the threshold of recognition. By integrating different AI technologies, such as natural language processing, speech and vision recognition, Baidu Brain is able to quickly and efficiently perceive and understand the real natural language processing framework like human beings. Baidu Brain powers AI applications in various industries and are fully integrated with different scenarios for innovation. Powered by Baidu Brain, the company’s AI Cloud business has made various AI applications for the utility, public service, manufacturing and other traditional industries to help its customers improve efficiency through technology innovation. In terms of software and hardware integration, Baidu independently developed AI chip, Baidu Kunlun, optimized for voice, natural language processing, image and other AI technologies, is capable of supporting deep learning frameworks, such as PaddlePaddle, and flexibly supports training and prediction, making AI models more efficient in computing and within the application. In addition, the Baidu Honghu chip was developed for far-field voice interaction, making voice interaction between people and cars, smart homes and other devices easier and more fluent. Separately, Baidu also works with partners to build hardware ecology. As of December 31, 2022, PaddlePaddle had been equipped with more than 30 chips. PaddlePaddle: PaddlePaddle is Baidu’s self-developed deep learning framework, which the company open-sourced in 2016. PaddlePaddle aims to solve a real problem for the public service sector and traditional industries, and enables developers to implement AI technologies efficiently. PaddlePaddle provides a deep learning framework based on programming logic enabling both development flexibility and stability; the ultra-large-scale training capacity for real-time updates of trillion-level parameters of deep learning models; end-to-end deployment of high-performance inference engines designed for diverse platforms and devices; and open-source industry-grade models covering a wide range of applications. PaddlePaddle has boosted the diversification and scaling of AI applications. As of the end of 2022, PaddlePaddle developer community grew to 5.35 million and served over 200,000 businesses. Developers, academic institutes, enterprises, government administrations and hardware OEMs works together on PaddlePaddle, allowing PaddlePaddle to cultivate various industry models. As a result, PaddlePaddle is well capable to run through the entire AI industry chain, from hardware adaptation to model training, inference deployment and application, consolidating the foundation of industrial intelligence and accelerating the pace of intelligent upgrading In addition, Baidu has partnered with academics and industry to develop AI talents. EasyDL and BML (a full-featured AI development platform) are PaddlePaddle’s enterprise versions. AI Chips. Baidu AI Chip, which was introduced in 2018, is a cloud-to-edge AI chip specifically designed for Baidu’s computing environment. As of December 31, 2022, both Baidu AI Chip I and Baidu AI Chip II have been in mass production. Baidu AI chips have been used for the company’s search engine, cloud, and Xiaodu’s business needs, while powering its deep learning computing needs. For example, the Baidu AI Chip II optimizes the company’s AI technologies, such as voice, natural language processing and images and support deep learning frameworks, such as Baidu’s open source deep learning platform, PaddlePaddle. The diverse range of uses enables Baidu AI Chip II to power different AI applications, such as Internet core algorithms, smart cities and smart industry. Furthermore, Baidu AI Chip optimizes the company’s AI capabilities on AI Cloud server. In addition, the company has also developed Baidu Honghu to power DuerOS smart devices and in-vehicle infotainment to improve speech recognition performance and provide a cost advantage in its AI offerings. The company has also developed a proprietary technological infrastructure which consists of technologies for search, marketing services, and large-scale systems. The company’s established infrastructure serves as the backbone for AI, mobile and PC platforms. Mobile Ecosystem Technologies Search Technologies The company’s search is powered by a set of industry-leading technologies, including the following, among others: Ranking: The company compares search queries with the content on web pages to help determine relevance. The company has significantly improved the relevancy, freshness and authority of ranking using its machine learning modules to analyze the rich content on the Internet and user intent, to prioritize the search results. The company began using machine learning in 2010, to better understand the semantics beyond simple text of the search keywords, and in 2013, the company began to apply deep learning in its search ranking system, which is playing an increasingly important role. In 2019, the company began to develop Top 1 (satisfying user with the first search result) by significantly enhancing the results of question parsing and analysis, answer matching, extraction, page content understanding and other aspects of its search engine, which has greatly improved user satisfaction with its search products. Multi-Modal Search: The company has greatly improved the accuracy of speech recognition in scenarios, such as long sentences, mixed Chinese and English, and strong accent, and thus significantly improve user satisfaction of its speech search. The company has built a terminal visual interaction engine v1.0 for visual search and facilitated the implementation of convolutional neural network models, reducing the training costs through unsupervised or semi-supervised models. Marketing Services Technologies: The company’s marketing services platform serves billions of relevant, targeted sponsored links each day based on search terms users enter or content they view on web pages or in its apps. The company’s key marketing services technologies include Phoenix Nest, a web-based auction system to enable customers to bid for keywords and automatically deliver relevant, targeted promotional links on Baidu’s properties and Baidu Union partners’ properties. Designed to generate more relevant results, Phoenix Nest helps customers to identify popular keywords and provides them with tools for budget management and marketing effectiveness measurement. Large-Scale Systems and Technologies”: The company’s large scale and massive amounts of user traffic require its systems to efficiently and effectively allocate resources among the products and services in its large product portfolio. The company’s key large-scale systems and technologies include its internally developed automated management platform for large size clusters, which enables it to intelligently manage and allocate resources and automatically debug and relocate services, thereby, allowing the huge volume of requests on Baidu search platform to function stably across multiple internet data centers and a large network of servers. Research and Development Expenses The company’s research and development expenses included RMB23.3 billion (US$3.4 billion) in 2022. Intellectual Property The company has over 13,693 issued patents in mainland China covering invention, utility model and design, and intends to apply for more patents to protect its core technologies and intellectual property. Baidu has been recognized as a well-known trademark in China by the Trademark Office of National Intellectual Property Administration. In addition to owning LOGO and the related logos, the company has applied for registration of various other trademarks. The company also has registered certain trademarks in the United States, Australia, Brazil, Canada, Hong Kong, India, Indonesia, Japan, Malaysia, Mexico, New Zealand, Russia, Singapore, South Africa, South Korea, Thailand, the European Union and several other jurisdictions. In addition, the company has registered its domain name baidu.com and certain other domain names with authorized registrars of ICANN (Internet Corporation for Assigned Names and Numbers). The company has also successfully become designated Registry Operator for .baidu top-level domain names by ICANN. Sales and Distribution The company offers products and services for Baidu Mobile Ecosystem through its network of third-party agents and its direct sales team. The company typically enters into framework sales agreements with third-party agents, where third-party agents will sell online marketing services to customers, such as SMEs, domestic businesses and multinational companies on its behalf. The sales agreements typically limit the industry focus of the third-party agents. The third-party agents provide the company’s online marketing customers with numerous services, including identifying customers, collecting payments, assisting customers in setting up accounts with it, suggesting keywords to maximize ROI and engaging in other marketing and educational services aimed at acquiring customers. The company has direct sales presence in Beijing, Shanghai, Guangzhou, Shenzhen, and other cities, covering the major regional markets for its online marketing services and other services. The company covers its key accounts through direct sales team and enter into agreements with such key accounts directly. For AI Cloud, the company sells its cloud solutions including IaaS, PaaS and SaaS to its enterprise clients directly or through solution integrators. The company offers smart transportation solutions directly to provide tailored solutions to meet the specific needs of its clients. For Intelligent Driving and OGI, the company sells its products and services to its clients directly and through its third-party agents. iQIYI’s brand advertising is sold through third-party advertising agencies, including members of American Association of Advertising Agencies, or 4As, and leading Chinese advertising agencies, as well as through a direct sales force. Feed advertising services is sold primarily through third-party advertising agencies, whose existing long-term relationships and network resources it strategically leverages, to increase its sales and expand its advertiser base. Marketing The company focuses on continually improving the quality of its products and services, as it satisfied users and customers are more likely to recommend its products and services to others. The company has built its brand with modest marketing expenditures. The company has implemented a number of marketing initiatives designed to promote its brand awareness among potential users, customers and Baidu Union partners. In addition to its brand positioning in the market, the company initiated a series of marketing activities to promote its products and technologies among existing and potential users and customers, including but not limited to, Baidu World Conference. Competition QIYI competes with Tencent Video, Youku, Mango TV and Bilibili for both users and advertising customers. The company competes with Huawei and Kingsoft cloud for its cloud offerings. History The company was founded in 2000. It was incorporated in the Cayman Islands in 2000. The company was formerly known as Baidu.com, Inc. and changed its name to Baidu, Inc. in 2008.