Chinese tech companies like Baidu drop language model pricing, which are used to fuel AI chatbots

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Chinese tech companies like Baidu drop language model pricing, which are used to fuel AI chatbots
Chinese tech companies like Baidu drop language model pricing, which are used to fuel AI chatbots

Chinese internet behemoths Baidu and Alibaba cut the prices of large-language models (LLMs), which enable generative artificial intelligence products, on Tuesday as a pricing war in the cloud computing market heated up in China.

As a price battle in the cloud computing space heats up in China, Chinese internet giants Baidu (9888.HK) and Alibaba (9988.HK) opened new tabs and lowered the prices of large-language models (LLMs), which enable generative artificial intelligence products, on Tuesday.

Alibaba Cloud’s Tongyi Qwen LLMs now have prices as low as 97%, according to the company. For example, with the price reduction, its Qwen-Long model will only cost 0.0005 yuan per 1,000 tokens, or units of data processed by the LLM, down from 0.02 yuan per 1,000 tokens.

Baidu swiftly followed suit, announcing several hours later that all corporate users would receive a free copy of its Ernie Speed and Ernie Lite models.

Since China witnessed a surge in investment in big language models in reaction to the successful launch of U.S.-based OpenAI’s ChatGPT in late 2022, many Chinese cloud suppliers have depended on AI chatbot services to increase sales.

Large-language models, which are the foundation of these chatbots, are now being impacted by the price battle in China’s cloud computing market, which might reduce profit margins for businesses.

Corporate clients had to pay to use Baidu’s Ernie Lite and Ernie Speed until Tuesday, when they were first made available.

The flagship model of Bytedance’s Doubao LLMs will cost 99.3% less than the industry average for commercial users, as the company revealed last week.

Chinese LLM developers have concentrated on charging companies to make money off of their LLM investments.

Some have also started going after specific users. Recently, the Chinese startup Moonshot introduced a tipping function that allows both individual and business customers to pay to give their chatbot usage priority.

The most advanced Ernie 4 model from Baidu costs 59 yuan a month. Baidu was the first firm in China to provide its LLM products to paying customers.

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