Reports suggest that Baidu is spinning off its video service business into a separate entity as part of a move to separate its core search business from other businesses. The new unit recently raised $ 155 million of fresh capital from the Shanghai New Media Culture fund and SAIF partners. Baidu’s strategy to make its capital intensive units, which are not currently profitable, independent of its core business. And this appears to be similar to what Google is doing after formation of its parent company Alphabet. This strategy should benefit Baidu’s shareholders, as the video business can be run more efficiently as a separate company. Drawing expertise from other partners investing in it, the new, separate entity can avoid being a drag on Baidu’s profitable core businesses.
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