Chapter 659
Fermentation
Chapter 659 Fermentation (4k)
Baidu has once again been embroiled in controversy in the medical field, and this time the public outcry is far greater than the previous incident involving the excessive commercialization of its online forum, Tieba.
Whether it was the criticism on the Baixiaosheng Forum or Bi Sheng's direct confrontation with Baidu executives, these were ultimately limited to the business and industry level. Every year there are similar incidents, big and small, and such situations are quickly overshadowed by other hot topics as Baidu makes rectifications.
However, this time everyone has seen firsthand the serious consequences of Baidu's mechanism, which involves not only money but also lives.
This makes people extremely angry.
The earliest news came from Tencent's WeChat, and then spread on platforms such as Baixiaosheng Forum, Douyin, Zhihu, and Sina. It was further amplified by the short seller's immediate interview in Hong Kong, and by evening it had become a nationwide wave.
As Yu Xing said, this is not a matter of moral superiority, but a matter of being a normal person first.
Baidu is undoubtedly the leading search engine in China. It can be said that almost every netizen has used this well-known brand. Therefore, when its abnormality is so obvious, it has suffered a backlash from the entire internet.
This time, Baidu reacted even faster than before, announcing an internal investigation and issuing an apology.
However, this attitude did not cool things down; on the contrary, the familiar tone only fueled everyone's anger.
As public opinion continues to ferment, exposés from state media eight years ago regarding Baidu's paid search rankings have resurfaced, causing even greater shock and anger. Back then, Li Yanhong addressed the issue in a similar manner to the handling of Baidu Tieba's excessive commercialization, issuing an internal open letter.
He expressed his deep sadness and remorse for the problems uncovered by the report and the damage it caused to the Baidu brand, employees, and users. He quoted the ancient saying, "To know one's mistakes and correct them is the greatest virtue," and called on all employees to realize Baidu's value and mission by providing users and customers with truthful information and effective services.
The open letter from eight years ago and the open letter from a week ago, when compared side by side, both seem so heartbreaking, but... after eight years of pain, Baidu's problems with paid search ranking have only gotten worse!
Have you acknowledged your mistake? Have you corrected it?
The voices of doubt and criticism were overwhelming.
Amidst this widespread online discussion, Nasdaq opened for trading, and Baidu's stock price plummeted 8% within an hour, wiping out 340 billion yuan in market value. The decline narrowed during the day, but fell again at the close, ultimately settling at $153.9, a drop of 10.3%.
Bloomberg was the designated media outlet for the Hong Kong Stock Exchange to cover the listing of Silicon Carbon Group. It also reported on Yu Xing's latest remarks, who has multiple roles, and tracked public opinion regarding Huaxia Network. This almost seamlessly connected with Wall Street's observations on the situation of Baidu.
The last instance of excessive commercialization of Baidu Tieba was generally considered an isolated case on Wall Street, and the stock price subsequently recovered to some extent. This time...
Is this just an isolated case?
If this is still an isolated case, Baidu's advertising bidding ranking is extremely profitable, and the oversold stock price presents a buying opportunity.
There is some disagreement among Wall Street analysts, with most believing that further observation is needed. A significant number of analysts who lowered their expectations for Baidu's stock price have interpreted and considered the criticism from Yu Xing, the "King of Short Sellers." With two similar public opinion events occurring in succession, Baidu may not be able to escape so easily.
The most crucial question now is whether this public opinion storm will trigger negative policy developments, thereby harming Baidu's advertising business. This undoubtedly requires further waiting.
In one night, including pre-market and post-market trading, Baidu's market value evaporated by more than 400 billion yuan, and it faced a wait-and-see attitude from many institutions. For Baidu employees who worked overtime overnight, there was a familiar fatigue and a well-established way to handle the situation.
Social media should handle what needs to be done through public relations; if that fails, create different voices. The public attitude should still be one of deep regret, and responsibility should be assigned and internally addressed. As for whether or not to issue an internal open letter...
Anyway, it hasn't been released yet.
The trending topics on Weibo have dropped, the questions on Zhihu have disappeared, and Leyin and Wechat are communicating.
The day after the incident broke out, the overall momentum seemed weaker compared to the previous day's nationwide surge. Liang Yanci, a senior executive at Baidu who was paying attention to the situation, felt that the situation could be controlled this time, just like last time. However, she was also somewhat distressed by the setback in her company's stock holdings, so she posted an update on her Weibo account.
"Baidu's stock price will come back. According to Yu Xing himself, Baidu's fundamentals have not changed. Why are so many people concerned about things like Baidu's paid search ranking? Public opinion is just a trick manipulated by the market. Yu Xing should be more concerned about his own stock, which has fallen below its initial offering price."
Liang Yanci herself was responsible for part of the public relations work. Although Baixiaosheng Forum and Douyin were still full of criticism, those were originally the camp of competitors, and the feedback from other platforms was still relatively controllable.
Her Weibo account was not verified with a company and she usually just shared her daily life. However, this time, her post was exposed shortly after it was published, and people traced it back to her past Weibo posts, revealing that she was a Baidu employee.
Some platforms that had just been shut down suddenly saw new themes of mockery emerge.
Whether it's Alibaba's Leyin or Tencent's WeChat, many users have used the tag "I am Guoshanfeng" to join the battle of public opinion, either by reposting or criticizing. This wave of popularity that originated from short videos has once again brought back the trending topics on Weibo and Zhihu.
Yu Xing held a listing banquet in Hong Kong last night and returned to Shanghai this morning on an early flight.
He had just gotten off the plane and was browsing his phone when he saw the screen filled with images of mountains.
Li Song, who had been following the drama closely, immediately explained the situation to President Yu: "Guoshanfeng has been exposed, now it's all Guoshanfeng."
As one mountain peak fell, countless others spontaneously rose up.
Yu Xing shook his head slightly, without saying anything.
Xu Xin then asked, "Mr. Yu, what's your view on Baidu's future stock price trend?"
"How am I supposed to keep track of other companies' stock price movements?" Yu Xing joked. "I'm too busy worrying about my own company's stock price right now."
The stock price of Silicon Carbon Group fell below its IPO price on its first day of trading.
Its issue price was HK$75.56, with a market capitalization of HK$680 billion. Yesterday's closing price was HK$73.68, a drop of 2.5%, resulting in a price below the issue price.
This added a slightly somber tone to the joy of the successful listing. However, everyone was generally satisfied and knew that the real test for the Silicon Carbon Group's stock would likely be its listing on the main board six months to a year later.
Despite his words, Yu Xing then shared his thoughts: "This incident involving Baidu will definitely have a greater impact. It will need to undergo some transformation, and its stock price may recover, rebound, or even reach new highs."
Xu Xin and Li Song listened intently, and each pondered what was said.
Compared to the pessimistic views expressed by various voices, the big short seller seems to be more calm and objective.
Yu Xing's next sentence made both of their expressions freeze simultaneously.
"We will do everything in our power to stop its transformation."
Xu Xin opened her mouth, then closed it and thought for almost a minute before asking, "President Yu, what are you doing...?" She was a little confused, "Is silicon carbon going to do a search?"
Xu Xin noticed 360's plans for the search business yesterday, and even knows more. This time, 360 is "putting aside past grievances" and is still contacting Tencent, wanting to make a bigger impact in the search market.
Today, there are also subtle signs of unusual activity at Sogou.
Yu Xing shook his head and gave accurate information: "No, we won't specifically do search. Although content platforms like Douyin will take away a portion of Baidu's market share, I mean, we're targeting Baidu's transformation. Baidu has failed in several directions, so they can only focus on AI. Andrew Ng from its research institute resigned yesterday, and Yu Kai contacted me last night. Andrew Ng will be going to the DLF Foundation."
Andrew Ng is the head of Baidu Research Institute and Baidu's chief scientist. It was Yu Kai who brought him back to Baidu, but Yu Kai later left to start his own business, Horizon Robotics.
Knowing about this past event, Xu Xin was even more surprised: "President Yu, you acted so quickly?"
Yu Xing denied it, saying, "I didn't contact him proactively. It was Andrew Ng who resigned on his own, but he didn't have a good place to go in China. He could either do his own projects like Yu Kai, go back to the United States, or go to the DLF Foundation, which is currently working on several projects."
The DLF Foundation is a third-party non-profit organization whose goal is to promote research in machine learning, deep learning, and artificial intelligence in China.
There are not many places in China that conduct in-depth research on machine learning. The main focus of Lingang's carbon silicon research is on combining Linggang's lidar with autonomous driving technology for new energy vehicles.
Therefore, without any intention of returning to the United States, Andrew Ng directly announced his decision to "parachute" into the DLF, which the foundation naturally welcomed warmly.
Yu Xing believes this matter can play a greater role.
Every storm eventually fades away, and Baidu is no exception. Just as he and Xu Xin said, Baidu went all-in on AI after the addition of Lu Qi from Microsoft, which once brought its stock price back to its peak.
New stories will emerge, and riding the wave of these new stories will gain recognition from the capital market. However, in the end, it turns out that Baidu is still the same Baidu.
Yu Xing felt this was a waste. Since Andrew Ng could come, others could naturally come too. The DLF Foundation is non-profit, but the projects it incubates can pursue commercialization.
This incident presents a great opportunity to poach talent from Baidu Research Institute, and also an opportunity to hinder its subsequent transformation.
Xu Xin pursed her lips, feeling that the friction between silicon carbon and Baidu seemed to be getting bigger and bigger, and the cooperation on Pinduoduo was something she had to keep pushing even though she had to hold her nose.
She didn't know if Mr. Yu could actually thwart Baidu's transformation, and she felt that the fate of both people and companies could be truly unpredictable at times.
Yu Xing then browsed the latest public opinion information on his phone.
He didn't offer any comment, but simply clarified once again: "I didn't short Baidu. This was an unexpected event, and the public opinion is mainly a backlash from its own actions."
Upon hearing this, Li Song enthusiastically suggested, "President Yu, whether you explain or not, people will assume you've shorted Baidu. Why not just go all the way and short it directly!"
His mind immediately clicked: "Anyway, you said it yourself, that foundation can play a role in hindering Baidu's transformation. If you raise your voice, Baidu's stock price will have to drop even further!"
Seeing that President Yu remained silent, Li Song earnestly advised, "President Yu, when dealing with a company like Baidu, we don't need to talk about any code of honor. Even if there were no negative news, we can create negative news!"
This is something he has been pondering lately. The inspiration didn't come from Baidu, but from reviewing Guo Shanfeng's past actions.
Li Song noticed that rumors were circulating that Tencent was being secretly shorted by Guoshanfeng, but this less Guoshanfeng-like short-selling method was that Yu Chengdong sold WeChat to Alibaba.
How did WeChat come about? Didn't Mr. Yu create it himself?
If Mr. Yu hadn't created WeChat, Tencent's stock price would definitely still be stable after that incident.
Thinking about it this way, and looking at the current situation, he realized there was clearly an opportunity to create negative news.
Yu Xing glanced at Li Song with some surprise and chuckled, "President Li, I didn't expect you to think that way. I think your vision surpasses that of President Xu. This matter can't be done now, but perhaps there will be an opportunity in the future. Let's see."
Li Song's suggestion was not adopted, but he received a compliment, which made him look at his wife with a smile.
Then, he received a cold look and immediately suppressed his joy.
Yu Xing ignored the couple's flirtatious glances and, after thinking for a moment, said, "Lingang should just focus on building cars. With Baidu's backlash this time being so severe, Pinduoduo's attention is probably indeed less focused."
Li Song and Xu Xin share the same feeling: everyone is too busy to pay attention to Pinduoduo now. Although it's different from what they imagined, they've achieved the desired result.
The group returned to Lingang, some working, some compiling reports, and some resting; none of them gave any media interviews.
However, Yu Xing's comments about Baidu have consistently appeared in media reports. Baidu's public relations efforts, which took effect yesterday, completely failed in the afternoon, with discussions and criticisms of the incident almost everywhere. Offline media also began to follow up with reports.
That evening, before Nasdaq pre-market trading began, a new piece of news emerged: a joint investigation team from multiple departments had been stationed at Baidu.
Meanwhile, according to rumors circulating from Baidu, the medical business unit, headed by Li Zheng, became the first scapegoat, and the entire department may be laid off or reassigned. Later that day, Baidu issued a second apology letter, apologizing to all users.
When Bi Sheng of Pinduoduo saw the apology letter, even though he wanted to be a loyal friend out of mutual benefit, he couldn't help but feel angry.
He updated his Weibo, pointing out the biggest problem: "Apologized yesterday, apologized today, Baidu, you have never apologized to that patient and his family."
The pioneering spirit of former Baidu employees has become a focus of attention within Baidu. When the temporary emergency team saw this Weibo post, they felt that changing it was problematic, but not changing it was also problematic. Changing it seemed to put them in a passive position, while not changing it seemed to lack sincerity.
Ultimately, Baidu did not change its own apology letter, but only submitted this piece of content as part of the boss's open letter, which can be regarded as a patch for external communication.
As Nasdaq opened, following yesterday's wait-and-see approach, Baidu's stock price plummeted again after policy-related moves were announced before the market opened.
Alibaba's Ma Chuan returned to Lin'an that evening after finishing his overseas activities. After reviewing the situation over the past two days, he commented: "The two companies are fighting quite fiercely. Baidu itself has too many problems. If it continues to fall, it will create a silicon carbon group."
I got stuck in traffic on my way home, so I'm updating as usual now. I'll start catching up on updates tomorrow.
(End of this chapter)