Baidu Inc. has announced that its Ernie AI chatbot will be free for all users starting April 1, a significant shift in the competitive landscape of artificial intelligence.
The company made the announcement in a WeChat post on Thursday, marking a strategic move to regain momentum in the rapidly evolving AI race, particularly in China. Following the announcement, Baidu’s stock surged as much as 7.9%, the largest intraday increase since October.
This decision positions Baidu’s Ernie model, which was one of the first AI platforms in China to gain approval for public use, in direct competition with domestic and international players like OpenAI’s ChatGPT, ByteDance’s Doubao, and DeepSeek. Baidu’s move could intensify the ongoing price competition among China’s top tech companies, which have aggressively rolled out AI products in response to the rapid development of generative AI since 2023.
Despite its early lead in China, Baidu has faced challenges in gaining widespread user adoption for its Ernie Bot. Newer entrants like ByteDance’s Doubao chatbot and DeepSeek’s cost-effective model have gained traction with users, putting pressure on Baidu’s market position. DeepSeek, in particular, has disrupted the market with an AI model that is trained at a significantly lower cost than its competitors, gaining popularity among local agencies and businesses.
Baidu’s decision to make Ernie free is seen as a response to the increased competition from these lower-cost alternatives. The move also highlights the growing monetization challenges in China’s AI sector, where pricing power is diluted by low barriers to entry and intense competition. According to analysts Robert Lea and Jasmine Lyu of Bloomberg Intelligence, the AI market in China is becoming commoditized, making it difficult for any single company to maintain a dominant position.
The company’s new strategy includes offering not only its chatbot for free but also launching an advanced search function powered by Ernie 4.0, its latest model, which it claims matches the capabilities of OpenAI’s GPT-4. This upgraded feature promises enhanced reasoning and expert-level responses, and will be available free of charge starting in April as well.
While Baidu faces significant challenges in the competitive AI landscape, it is betting on the future potential of its technology to drive user engagement. By making Ernie available to all users at no cost, Baidu aims to improve adoption rates and increase its presence in the AI market, which has quickly become a key battleground for global tech companies.
