Competition in China’s artificial intelligence-powered large language model sector is intensifying as leading Chinese tech companies have announced drastic price reductions of major LLMs, leading to a growing price war. The new round of price cuts will accelerate the commercial use and popularization of AI technology, as well as bolster and upgrade industrial development. Alibaba Cloud, the cloud computing unit of Alibaba Group Holding, announced a price reduction of 97% on its Qwen-Long LLM, which is equivalent to the performance of U.S. company OpenAI’s GPT-4 model. The model, which supports up to 10 million tokens of long text input, now only costs about one-400th of GPT-4's price. A token is the smallest unit into which text data can be broken down for an AI model to process. The steep price cuts cover nine of Alibaba’s self-developed LLMs known as Tongyi Qianwen. Liu Weiguang, President of Public Cloud Business at Alibaba Cloud Intelligence, said the purpose of slashing prices this time is to speed up the application of AI models in the domestic market.
Hours after Alibaba Cloud’s announcement, Baidu said its LLMs – including Ernie Speed and Ernie Lite, both launched earlier this year – are now available free of charge for all enterprise users. Earlier this month, ByteDance announced that the main model of its Doubao LLMs will be priced 99.3% lower than the industry average for business users. Chinese AI firm iFlytek said some versions of its SparkDesk LLM are free, or five times cheaper than similar products from competitors. Tencent Holdings also announced price cuts on its Hunyuan LLMs, and the Hunyuan-lite model is now available for free.
Chinese LLM companies have already made great progress in optimizing algorithms and improving computing power, and are able to provide AI-powered LLM services at a lower cost, said Wang Peng, Researcher at the Beijing Academy of Social Sciences. Wang said the substantial price reductions for LLMs will not only lower the threshold for enterprises to adopt AI technology, but also promote their digital transformation, adding that the application of AI technology will help enterprises improve operational efficiency and reduce costs, and further enrich the ecosystem of AI applications.
Experts said Chinese LLM developers have primarily targeted businesses for monetizing their investments in AI models, although some have begun targeting individual users who need to pay for using advanced chatbot services. Alibaba said earlier this month that its LLMs have been adopted by more than 90,000 corporate clients in a wide range of industries, one month after Baidu said its enterprise-level LLM platform Qianfan had been used by 85,000 business users.
Zou Debao, Deputy General Manager of AI and big data research at market research firm CCID Consulting, said the price war will likely squeeze profit margins of some LLM startups, while large Chinese LLM developers will further consolidate their dominant positions, expand market share and grab more clients amid increasingly fierce competition. Official data showed that the number of China’s self-developed LLMs ranks second in the world, and over 100 LLMs with more than 1 billion parameters each have been launched in the country, the China Daily reports.
The biggest difference between Chinese and Western AI lies in applications. It will take more than ten years to reach the artificial general intelligence (AGI) era, Baidu CEO Robin Li said, while calling for increasing AI investment and development. “A lot of people talk about AGI, they say: no, it's probably two years away, it's probably five years away. I think it's more than 10 years away,” Li made the remarks during a fireside chat with Maurice Lévy, Chairman of the Supervisory Board of Publicis Group when he attended VivaTech, Europe's biggest event dedicated to start-ups and tech in Paris. Li emphasized that “an application-driven approach can also propel innovation in the foundation model and speed up the transformation from an internet age to an AI age.” He added that in China, the focus is increasingly on creating super apps for the AI age, or killer AI native apps, the Global Times adds.
Chinese artificial intelligence (AI) start-up Moonshot AI is in talks with investors for additional financing that would value it at more than USD3 billion, making it the highest valued start-up of China’s so-called Four New AI Tigers. Chinese social media and video gaming firm Tencent Holdings also joined the round as a new investor. If the funding goes through, the new valuation would be half a billion dollars higher than in February, after it raised USD1 billion in a round led by Alibaba Group Holding. Alibaba Group is a major backer of Moonshot AI, holding a 36% stake in the firm. The Beijing-based start-up, known in Chinese as Yuezhi Anmian, is enjoying a rapid appreciation in its valuation amid a funding spree owing to the massive success of its Kimi chatbot. Founded a year ago, Moonshot has seen a surge in interest after it launched its ChatGPT-like product last October.
Alibaba has backed all of the country’s four new “AI Tigers”, including Beijing-based Baichuan and Zhipu AI, Shanghai-based MiniMax, as well as Moonshot AI, according to start-up data service ITJuzi.com, making it one of the most prolific backers of the country’s future AI champions. Shenzhen-based Tencent has so far invested in three of the AI tigers, save for Moonshot.
Moonshot's Kimi chatbot – built on the firm’s self-developed Kimi large language model (LLM) – has gained popularity among local users thanks in large part to its capabilities in handling extremely long text queries and responses. Upon its debut, Kimi was already able to process as many as 200,000 Chinese characters in a context window – the text that an LLM can process in a single conversation – lending it the ability to comprehend and answer questions on book-length documents. Moonshot quickly expanded Kimi’s capabilities to support up to 2 million Chinese characters in March. Founder Yang Zhilin said at an industry event last year that the company believes the ability to process long prompts is critical to future AI development.
The large context window and the fact that it was free led to a surge in Kimi’s popularity. It is now in league with Baidu, which has much deeper pockets, rivaling Ernie Bot in user traffic. Kimi was ranked the second most popular Chinese AI chatbot in April, with more than 20 million visits to its website and apps, according to AIcpb.com, which tracks the popularity of AI products worldwide. That placed it one spot above Ernie Bot, which attracted 16.91 million visits that month. The generative AI service built into Baidu’s online document service Wenku, which helps users create slide shows and outlines, was ranked the most popular generative AI service in China for the period. After announcing a 2 million-character context window in March, interest in Kimi was so high that part of the chatbot was inaccessible for two days at the end of the month. Seeking to deal with the high demand, Moonshot AI announced that it would start charging for faster response times, the South China Morning Post reports.
