The race for AI dominance is heating up as major players like Baidu and OpenAI respond to the rapid ascent of Chinese startup DeepSeek by making their advanced chatbot services free.
Baidu announced that its premium Ernie Bot, featuring AI painting and advanced reasoning, will be available at no cost starting April 1 on both mobile and desktop. The move follows OpenAI CEO Sam Altman’s statement that ChatGPT users will have unlimited access to GPT-5 for free, with an optional paid tier for higher intelligence levels.
A Strategic Shift
Baidu is doubling down on AI innovation. The company confirmed that it will launch the next generation of its AI model by June, with plans to open-source it for the first time—a strategy mirroring DeepSeek’s fully open approach. Additionally, Ernie’s Deep Search, an enhanced reasoning tool, will also be available for free in April.
The shift reflects mounting pressure in China’s AI sector, especially after DeepSeek’s R1 model disrupted the market with high performance at a fraction of the cost of US-developed alternatives.
Baidu’s bold move paid off on the stock market, with its Hong Kong-listed shares jumping 12% on Thursday and contributing to a 20% rise in the Hang Seng China Enterprises Index since January.
A Competitive Landscape
Since ChatGPT’s groundbreaking launch in late 2022, Chinese tech giants have raced to develop domestic alternatives. Baidu initially led the charge, beating out Tencent and Alibaba with its quick Ernie Bot release. However, it has since struggled against ByteDance’s Doubao, which has amassed a larger user base. Even Apple reportedly chose Alibaba’s AI over Baidu’s for its China-focused AI features.
The competition isn’t just coming from established firms. DeepSeek and rising star Moonshot AI—developer of Kimi, China’s third-most-used chatbot—are gaining traction. Other contenders include Zhipu AI, backed by Tencent and Alibaba, though it recently landed on the U.S. Commerce Department’s Entity List over alleged ties to China’s military.
Free AI Becomes the Norm
Most major AI firms, including OpenAI, Anthropic, and Baidu, now offer basic chatbot services for free, with monetization coming from premium features.
Baidu previously charged up to 59.9 yuan ($8.20) per month for Ernie Bot’s premium tools, including its text-to-image generator. Despite competition, Ernie has amassed 430 million users as of November 2024—and that number may grow further with its new free model.
With the AI arms race intensifying, the real question is: Will free access be enough to keep Baidu and OpenAI ahead of China’s rising AI challengers?
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