Baidu invested in Uber, Li Yanhong's intention is not "taking a taxi"

The day before yesterday afternoon, the cross-border investment between Baidu and Uber was finally announced. The two parties signed a strategic cooperation and investment agreement in Beijing, and Uber announced that it would accept Baidu's investment. The two parties reached a global cooperation: including technology entrepreneurship, opening up international markets and expanding China's O2O services. For both parties, this is a major event that can enhance investor confidence.

Although Robin Li did not respond directly to the rumored investment of US$600 million, the deal between Baidu and Uber is still a big event in the Internet circle. Baidu is one of the three giants in China's Internet industry, and Uber, the world's leading taxi software, is also a hot chicken in the United States. It is currently valued at about US$40 billion, and it should have no debt, a clear business model, and sufficient cash flow. Uber is one of the fastest-growing Internet companies. When Fidelity International Investment invested in Uber at a valuation of US$17 billion half a year ago, many people thought Fidelity was crazy. Now these people probably regret not following suit.

From the above, from a financial perspective, Baidu's investment in Uber should be a good deal, not to mention that it is said that the founder of Uber took the initiative to extend an olive branch to Robin Li. But Robin Li's starting point is not just this, because when announcing the cooperation with Uber, Robin Li clearly stated two principles of Baidu's investment: first, any investment behavior of Baidu is based on the perspective of strategic and commercial cooperation; second, Baidu "will not make any investment for pure financial returns, this is our bottom line."

In Li Yanhong's view, investing in Uber is of course a strategic move, and an extremely important strategic move. One of the evidences is that he personally attended the signing ceremony of this investment. Last year, Baidu acquired 91 for US$1.9 billion, setting a record for the largest transaction in the history of China's Internet. Li Yanhong did not meet with the public for this, but he personally attended the press conference this time. To put it bluntly, this is not about money. Uber is valued at US$40 billion. Based on the investment amount of US$600 million, Baidu's shareholding ratio will not exceed 2%. The reason is not how much it holds, but other things.

So what is the strategic significance of Baidu's investment in Uber? On the surface, there are probably three points. The first is to end the duopoly era dominated by Tencent and Alibaba in the domestic taxi APP competition and participate in the competition.

Secondly, improve Baidu's O2O ecological layout. The taxi-hailing software has a good payment scenario, and Baidu Maps, Baidu Wallet and other Baidu-related products can be integrated into it. Baidu's strategy is to "connect people and services". The so-called services are mainly based on "food, clothing, housing and transportation". Uber represents the "transportation" among these "food, clothing, housing and transportation".

The third is to seize the entrance to the future Internet of Vehicles. According to Lei Jun, there are five most valuable hardware entrances to the Internet, namely PC, mobile phone, car, TV, and router. These entrances are indispensable in the future Internet layout of the giants, but each has its own focus. For example, Baidu pays special attention to cars. It has not only developed an Internet of Vehicles platform, but has also been involved in the research and development of driverless smart cars.

These three points are all important, but they are only superficial "short-term interests". Li Yanhong's "high attention" is not about this. He regards the investment in Uber as a milestone in the internationalization of Baidu and even Chinese Internet companies. Li Yanhong believes that before this, investment between Chinese and American Internet companies was actually quite common, but there was almost no real deep-level strategic cooperation between Chinese and American Internet companies. Baidu and Uber have opened up a "new model of deep cooperation between China and the United States."

China-U.S. Internet cooperation is a topic that goes beyond economic significance. Last month, the World Internet Conference was held in Wuzhen, Zhejiang, China. Earlier this month, the China-U.S. Internet Industry Summit was held in Washington, D.C., with Lu Wei, director of the Cyberspace Administration of China, personally leading a delegation to participate. Earlier, at the Summer Davos Forum, China proposed the multilateral principle of Internet governance, aiming to open up a multilateral Internet structure and promote consensus among countries around the world. To achieve these goals, in addition to government promotion, the power of the economy and enterprises is greater and more flexible. The cooperation between Baidu and Uber fits this goal.

According to publicly disclosed information, the global cooperation between Baidu and Uber includes three parts, among which the expansion of China's O2O services is only the last, and the first is around technology entrepreneurship and the development of international markets. If the cooperation is implemented, it will change the status quo of Sino-US Internet cooperation. Before this, China has always been very weak in Sino-US Internet cooperation. The Chinese market is a place for American capital to compete. Chinese Internet companies have grown or made money in the mainland and have to go public in the United States to share profits mainly with American shareholders. However, at the business level, no Chinese Internet company has been able to successfully open up in the United States. Of course, it is also very rare for American Internet companies to succeed in the Chinese market.

If Uber can succeed in the Chinese market after the cooperation, and Baidu can also successfully expand into the US market, it will be a breakthrough. Robin Li also admitted that he has an ambition for this cooperation. He not only wants to promote Baidu's business globally through Uber, but also wants to explore a path that Chinese and American companies can follow.

Of course, although Robin Li doesn't like to talk about finance, the cooperation between Baidu and Uber will still be of great help in improving its capital market valuation.

From the perspective of strength, it is not impossible for Baidu and Uber to cooperate in exploring the international market. This is not only due to the economic strength of both parties, but also the technical strength. Uber is the largest innovative company in the United States, driving the company's rapid growth with leading technology, and Baidu is also one of the most technologically advanced Internet companies in China, with huge investments in search, artificial intelligence, deep learning, driverless cars, and indoor navigation, and has world-class technical capabilities.

Although it is not realistic for Baidu to counterattack the US market through Uber in the short term, there are a lot of cooperation opportunities between the two parties in emerging markets. Baidu and Uber both have the desire to enter emerging markets, such as Brazil. If Baidu launched Portuguese search in Brazil a few months ago, it was Baidu's way out with its own legs, then the goal of this strategic cooperation is to "drive" out with Uber's wheels. Currently, Uber has operations in 250 cities around the world, and emerging markets such as Asia Pacific are the most important growth areas. Baidu has also been accelerating its internationalization in recent years, and is currently operating in Southeast Asia, the Middle East and North Africa, Latin America and other regions.

In July, Robin Li revealed his international ambitions in an internal email to all employees, with the goal of making Baidu a household name in more than half of the world's markets. If the move to join forces with Uber, which is growing rapidly in more than 50 countries around the world, is successful, it is possible to achieve the effect of attacking Guo by pretending to be on the road and secretly crossing Chencang in the global competition with Google. If Baidu, Baidu Maps, and Baidu Navigation can be found wherever Uber is, it will be a huge success. Baidu's current market value is more than 80 billion US dollars, so it is no surprise that it will exceed 100 billion. At the same time, Baidu's technology investment can be further distributed in the global market to support the growth of its market value.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.