ByteDance returns to the second half of search, Baidu faces a tough battle

Standing at the crossroads where content platforms are subverting traditional search habits, Baidu urgently needs to leverage the power of AI technology to explore new commercialization paths.

Although it has been defeated three times, ByteDance still does not want Baidu to let down its guard!

After Toutiao Search, Wukong Search, and Lightning Search, ByteDance did not decline, but recently launched an independent search app "Douyin Search". Currently, "Douyin Search" has been launched on Huawei and vivo app stores, but has not yet been launched on Apple App Store.

The name also shows that ByteDance is different from the past. It has launched the strongest attack on the search field, especially Baidu, with the name of Douyin. In response, Baidu upgraded the Wenxin Yiyan App to "Wenxiaoyan" one year after its launch, positioning it as a "new search" smart assistant, and simultaneously launched new AI functions, which can be regarded as the official start of the "defense war" in the search industry.

In fact, all the Internet giants have tried to get a piece of the fat meat of search business. Because compared with recommendation algorithms, search is more precise. Especially for seeding, the transaction conversion rate is not at the same level. So, is it possible for this new recruit with the name of Douyin to shake Baidu's position? How can Baidu alleviate its embarrassing situation under the differentiation of demand? In the second half of the competition in search, can Baidu still dominate?

Part 1 Byte's new offensive

In 2019, ByteDance entered the search engine market with full confidence, and even posted a recruitment tweet titled "Here is an opportunity to build a new search engine, do you want it?", declaring war on the search engine market.

In less than a year, ByteDance's first independent app, Toutiao Search, was launched. Its content ecosystem focuses on Toutiao itself, and its "search + information flow" content model directly targets Baidu Search. It has attracted a certain amount of attention in the industry, and some media even believe that "Toutiao Search" will completely defeat Baidu.

But in three years, the dream of replacing Baidu has not been realized. ByteDance has successively launched Wukong Search and Lightning Search. Unfortunately, they eventually either transformed into picture and text communities or upgraded to AI tool sets, which is far from the original search engine positioning.

Whether it is due to the fierce market competition or the imperfect product itself, Bytedance's three defeats in three battles are enough to show that the search market is "difficult to crack." However, this time, the new search engine is directly named "TikTok Search", showing its determination to "fight to the end" in search.

In fact, ByteDance’s purpose in doing search is very simple, which is to increase commercial value and control traffic.

Currently, Baidu accounts for 70% of the domestic search market, and according to Baidu's second quarter financial report data in 2024, advertising revenue is 19.2 billion yuan, accounting for 56.6% of total revenue. This big cake obviously cannot be eaten by Baidu alone.

In addition, since Douyin’s daily active users exceeded 600 million in 2020, the growth has gradually slowed down. As traffic gradually peaks, Douyin needs to increase traffic and divert traffic from individual apps. For example, Soda Music and Douyin Mall have both launched independent apps.

However, just as TikTok users have become accustomed to "passive recommendations", it is obviously unrealistic to switch to "active search". Therefore, launching "TikTok Search" separately may be an attempt to rebuild the minds of some users and use the new App to take over the spillover traffic.

Looking back at ByteDance's search efforts over the past few years, although they have not been successful, this is not good news for Baidu. Since 2020, platforms including Douyin and Xiaohongshu have become the main content producers, and for search, the essence is content extraction. As the content of other platforms increases, they will naturally grow into a place for users to obtain content.

Baidu founder, chairman and CEO Robin Li also said in a previous earnings call, "From the perspective of external pressure, the weak macro environment and competitive pressure are our main challenges. In addition, the user behavior of Chinese Internet users has changed a lot. More and more users are spending their time on short videos and social media platforms. Therefore, changes in user time allocation also have an impact on our online advertising business."

Therefore, in the view of Tech News, ByteDance's vigorous development of search has had the greatest impact on Baidu by changing the industry logic and user search thinking, leading to a group of "little brothers" besieging Baidu, causing subtle changes in the entire market model.

Part.2 New threats from Baidu

In addition to ByteDance's efforts in content search, content platforms such as WeChat, Xiaohongshu, and Zhihu have become one of the new era "search engines" for young people. Although they are not specialized search engines, this does not prevent users from looking for answers on them. With the "user answering user" model, these platforms have achieved more real, instant, rich and personalized answers. It has also caused some trouble for Baidu.

Nowadays, major content platforms have gradually formed their own "data islands", and Douyin, Xiaohongshu, Bilibili, Quark, etc. have become new battlefields for users to search for content. In fact, with the continuous competition among content platforms, high-quality content has poured into the field of short video and graphic creation, and users' search behavior has gradually begun to migrate to content platforms.

Moreover, the huge traffic of the platform also provides soil for search. More directly, these platforms have affected Baidu's revenue and the change of users' search habits, causing Baidu to become increasingly embarrassed.

A very simple example is that when you encounter a level that you can't pass while playing a game, or want to improve your competitive level and need to check guides, most gamers tend to search directly on Bilibili or Douyin instead of searching on Baidu. This is because Baidu not only filters out useless information, but also mostly searches for pictures and texts, which are not as intuitive as video platforms for users. In addition, Baidu's search results will also point to other content platforms, so it is more convenient to search directly on these platforms.

The essence of the change in the search industry is the change in the way users obtain information. Previously, the only ways to obtain information may be text and a small number of pictures, but now, with the explosion of videos and graphics, the content density and richness can already meet the daily needs of users. This has led to the fact that whether it is Douyin or Xiaohongshu, today's Internet platforms almost naturally provide users with search functions while also taking away Baidu's traffic.

According to the data from the "2024 Massive Engine Search Advertising Marketing Plan", the average number of searches conducted by Douyin users now reaches 7 times a day; Xiaohongshu COO Conan revealed in an interview in December 2023 that nearly 70% of Xiaohongshu's monthly active users will search, and one-third of the monthly active users will go straight to search as the first step after opening the software.

Baidu's financial report also shows obvious signs of "erosion". In the past year, Baidu's online marketing revenue growth rate has fallen from 15% in the second quarter of last year, 5% in the third quarter, and 6% in the fourth quarter to 3% in the first quarter of this year. Even in the second quarter of this year, online marketing revenue decreased by 2% year-on-year. This is the first time in six consecutive quarters that Baidu's online marketing revenue has fallen while the Internet advertising market has continued to grow. At the same time, compared with other manufacturers in the market, Pinduoduo, Meituan, Bilibili, Kuaishou, and Tencent all have a growth momentum far higher than the industry.

However, the reality is that although the business scope of these content platforms has spread across various fields such as short/medium videos, graphic social networking, e-commerce, and local life, they still lack a strong connection center, just like Baidu can connect video, e-commerce and other services through search, which is also Baidu's advantage. But in the face of the changes brought about by AI, Baidu also needs some bolder attempts.

Part.3 The old king has difficulty defending in the second half

With cross-border players led by ByteDance taking turns to fight, Baidu has of course sensed the chill and officially announced that the Wenxin Yiyan APP has been officially upgraded to Wenxiaoyan, positioning itself as Baidu's "new search" smart assistant to stabilize the situation.

Before Wen Xiaoyan, the so-called new search of Baidu that C-end users were exposed to was mainly the first item on the Baidu search results page, which added generative AI. The launch of Wen Xiaoyan is an important step for Baidu to attract more users to the new search. There is no doubt that if the new search develops further, it will be able to subvert traditional search and the ecological pattern formed by content APPs in the past. This will also be a key battle for Baidu to win the battle to defend the search market in the AI ​​era.

But in fact, AI search in its current form only saves users the process of clicking on web pages, selecting web pages, and viewing web pages, using large models and AI to do this. In other words, the most obvious difference between AI search and traditional search engines is the great improvement in efficiency. This improvement in efficiency also lies in the significant reduction of barriers to entry and the diversification of search forms.

However, Baidu's AI search also has obvious drawbacks. First of all, the form of result presentation: AI search is still mostly text-based, while other content platforms can provide videos or pictures, which are richer and more intuitive than text content.

In addition, AI-enabled search business may have a certain impact on advertising. Robin Li also admitted this in the earnings call. He said that AI-generated search results may reduce advertising display, thus having a short-term negative impact on monetization.

It should also be noted that the closer to the transaction, the shorter the conversion path of the ad, and the higher the user's tolerance for the ad. However, Baidu is too far away from the transaction, and now users are more accustomed to using e-commerce platforms, short video platforms and Xiaohongshu to assist in consumer decision-making, so the value of Baidu's advertising is getting lower and lower.

However, before the "transformation" into WenXiaoYan, WenXinYiYan App had officially started commercialization, with models including recharge and subscription. As for the future, Baidu Vice President Xue Su said that new products will definitely match new business models, "because user value and business value are linked, and simply applying the traditional product approach to the business model will definitely not fail." However, he has not yet further explained the specific direction of exploration.

Baidu needs to face the challenge of changing the user search mindset on the one hand, and find new commercialization paths under AI on the other. Baidu attaches great importance to the Wenxin Yiyan model and Wenxiaoyan, not only to cope with product competition in the AI ​​2.0 era, but also to consolidate the market position of its core business search engine.

In the new era, Baidu undoubtedly wants to hold on to its search base. Although content platforms such as Douyin and Xiaohongshu and AI companies such as Tiangong and Mita do not have the confidence and strength to challenge Baidu, the entry of new players will change the way users obtain information, efficiency and experience. When search results become more novel and AI search is powerful enough, Baidu must also give up the search pie.