Chinese tech giants Alibaba and Baidu engaged in a price war on Tuesday, slashing prices on large-language models used in generative artificial intelligence products, intensifying competition in China’s cloud computing sector.
Alibaba’s cloud division announced significant price reductions of up to 97% on its Tongyi Qwen LLMs. For example, its Qwen-Long model, previously priced at 0.02 yuan per 1,000 tokens, will now cost only 0.0005 yuan per 1,000 tokens.
Following suit, Baidu swiftly announced that its Ernie Speed and Ernie Lite models would be made available free of charge to all business users.
This move comes amid an ongoing price war in China’s cloud computing industry, with major players like Alibaba and Tencent recently lowering prices on their cloud services. Many Chinese cloud providers have leveraged AI chatbot services to drive sales, particularly after the success of U.S.-based OpenAI’s ChatGPT in late 2022.
The price battle has now extended to large-language models, which are essential for powering these chatbots, posing a threat to companies’ profit margins.
Previously, Baidu’s Ernie Lite and Ernie Speed models were available for a fee to corporate customers. Bytedance also joined the fray last week by pricing its Doubao LLMs substantially lower than the industry average for business users.
Chinese developers of large-language models have primarily targeted businesses to monetize their investments in AI technology. However, some have begun exploring opportunities to cater to individual users as well.
Baidu was the first company in China to offer its LLM products to paying consumers, charging a monthly fee of 59 yuan for access to its advanced Ernie 4 model.
