Alphabet’s Google Goes Talent Shopping in China


Jan. 22 2018, Updated 2:30 p.m. ET

Google opening AI lab in China

Alphabet (GOOGL) is set to release its 4Q17 earnings results at a time when it is making an aggressive push to make inroads into China (MCHI), the world’s second-largest economy and a coveted technology market.

Just over a month ago, Google, Alphabet’s largest and most profitable arm, announced that it was opening a research center devoted to AI (artificial intelligence) in Beijing, China. Although most of Google’s Internet services are blocked in China, the company has maintained a presence and investment in the country.

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AI arms race

With the China AI lab, Google is hoping to tap into China’s AI talent pool as the AI arms race heats up. China’s leading technology brands Baidu (BIDU), Alibaba (BABA), and Tencent (TCEHY), fondly known as BAT, are also active in AI research. Competition is thus high for top-notch AI skills in China. Baidu, for instance, invests $1.5 billion, or roughly 15% of its annual revenue, in R&D (research and development), with AI receiving most of the funds. Alphabet invested $4.2 billion in R&D in 3Q17.

Companies looking to leverage AI to open new revenue streams

Stiff competition for top-notch AI researchers stems from businesses banking on leveraging AI technologies to bolster their competition and unlock new sources of revenue. For Google and Baidu, AI technologies could help them offer more relevant information to people browsing the Web as well as strengthen their autonomous driving systems.


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