In a rapidly evolving race for dominance in the artificial intelligence (AI) sector, Baidu, the Chinese tech giant, has made a bold move to offer its advanced AI chatbot, Ernie Bot, for free. This decision comes in response to the rising influence of competitors like DeepSeek, whose recent success has sent shockwaves through the global AI market.
Baidu’s Ernie Bot, which boasts premium features such as AI-generated art, will now be available at no cost to mobile and desktop users starting on April 1. The announcement was made in a WeChat post on Thursday, signaling a shift in strategy as the company faces increasing pressure from emerging players in the AI industry.
The AI Battle Heats Up
Just hours before Baidu’s announcement, OpenAI CEO Sam Altman shared an exciting update about the future of its flagship product, ChatGPT. On X (formerly Twitter), Altman revealed that users of ChatGPT will soon receive unlimited free access to GPT-5, OpenAI’s next-generation model. However, those with paid subscriptions will enjoy access to enhanced features, including a “higher level of intelligence” compared to the free version.
While Baidu made its bold move in response to OpenAI’s plans, the company also made another important announcement: it plans to release the next generation of its AI model by the end of June. For the first time, Baidu will make this new model open-source, following the example set by DeepSeek. The Chinese company’s Ernie Bot will also see new improvements, including the launch of its Deep Search function, which provides expert-level responses and more sophisticated reasoning. This feature will be available to all users for free starting in April.
These announcements illustrate the intense competition in China’s AI sector, with Baidu working to maintain its position in the race. DeepSeek, a rising star in the AI space, has introduced its R1 AI model, which has stunned the industry by matching the performance of US-based tech giants at a fraction of the cost.
Baidu’s Financial Success Amid Competition
The announcement that Baidu would be offering its AI services for free had an immediate impact on its stock market performance. Baidu’s shares, which are listed on the Hong Kong Stock Exchange, surged by 12% on Thursday. By Friday, the shares were trading at 95 Hong Kong dollars ($12.20) per share. This rise in stock value came as Baidu continued to play a prominent role in the Hang Seng China Enterprises Index, contributing to the index’s 20% growth since January.
Despite these gains, Baidu faces increasing pressure from smaller, more agile players in the AI field. The company’s AI chatbot, Ernie Bot, has struggled to capture the same level of popularity as some of its competitors, such as ByteDance’s Doubao. In fact, Apple reportedly selected Alibaba over Baidu to support its AI functions in China after evaluating multiple AI firms.
The Emergence of New Competitors
While Baidu remains a key player in China’s AI race, it is facing intense competition from newer startups that have quickly gained ground in the AI space. DeepSeek, which has introduced its highly competitive R1 AI model, has been a standout. The company has quickly gained a reputation for offering AI models that rival those of Western companies while being more affordable.
Another player that has been gaining traction is Moonshot AI, based in Beijing. This company launched its own version of ChatGPT, called Kimi, in late 2023. By January 2024, Kimi had become the third-most visited AI chatbot in China, following DeepSeek and Doubao. These rising competitors have caused some of China’s established tech giants to lose their once-dominant positions in the AI sector.
Zhipu AI, another promising startup backed by Tencent and Alibaba, has also entered the AI race. Zhipu originated from Beijing’s prestigious Tsinghua University and has strong government connections. However, the company recently faced a major setback when the US Department of Commerce added Zhipu to its “Entity List” for allegedly supporting the Chinese military—a claim Zhipu denies.
Baidu’s Strategic Shifts in Response to AI Competition
As Baidu continues to navigate the fast-changing landscape of China’s AI industry, the company has shifted its strategy to remain relevant. While it has already charged for premium AI services in the past, including its text-to-image generator, the decision to offer these features for free signals Baidu’s commitment to keeping up with the latest trends and ensuring that it does not lose ground to competitors.
Ernie Bot, Baidu’s flagship chatbot, began charging for premium features in 2023, with prices reaching 59.9 yuan ($8.2) per month for services like its text-to-image generator. By November 2024, Ernie Bot had amassed 430 million users, marking a notable achievement in the company’s pursuit of AI dominance.
The pressure on Baidu is clear, as the company faces mounting competition not just from established players like OpenAI, but also from innovative startups, emerging companies and similar business ventures that are pushing the boundaries of what AI can do. As China’s AI market becomes increasingly crowded, Baidu will need to adapt quickly to maintain its edge.
The Future of AI in China and Beyond
The landscape for AI development in China is rapidly changing. The pressure on established companies like Baidu has never been higher, with new competitors such as DeepSeek, Moonshot AI, and Zhipu AI making waves. With Baidu’s bold decision to offer its premium AI features for free and its plans to release an open-source AI model in June, the company is attempting to solidify its position in this highly competitive field.
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