Baidu and Alibaba Move to Fill OpenAI Void in China

Baidu Inc. and Alibaba Group Holding Ltd. are stepping in to fill the void left by OpenAI’s abrupt withdrawal from the Chinese market.

This development comes as OpenAI, the creator of the widely-used AI tool ChatGPT, announced it will cut off access to its services in China, effective from July.

OpenAI’s decision to ban access has triggered a swift response from major Chinese AI companies, eager to capitalize on the opportunity to expand their influence in the burgeoning field.

In recent memos to Chinese users, OpenAI warned that it would halt access to its AI development software and tools, leading to a scramble among local companies to attract developers.

Baidu and Alibaba, along with other tech giants such as Tencent Holdings Ltd. and startups like Zhipu AI, have launched various initiatives to entice developers to transition to their platforms.

Baidu is offering free AI model fine-tuning and expert guidance on its flagship Ernie model, alongside 50 million free tokens for developers.

Alibaba and Tencent have also posted advertisements encouraging the shift, with Baichuan, backed by both Alibaba and Tencent, offering 10 million free tokens.

This move is seen as a chance for Chinese tech leaders to increase their market share and strengthen their positions in the AI sector.

“Leading Chinese large language models can benefit from the restricted access to OpenAI, and it will help to filter out smaller, less effective players from the market,” said You Chuanman, head of the Chinese University of Hong Kong-Shenzhen’s IIA Centre for Regulation and Global Governance.

However, the move also presents challenges, as it deprives smaller startups of some of the best tools available for AI development.

The impact of OpenAI’s exit extends beyond corporate maneuvering. It highlights the ongoing geopolitical tensions between China and the United States, particularly in the realm of advanced technologies.

The U.S. has been actively seeking to curb Beijing’s AI and semiconductor advancements, and OpenAI’s withdrawal is viewed as part of this broader strategy.

Chinese artificial intelligence-related stocks, including those of Alibaba and Iflytek Co., saw an uptick following the announcement.

This reflects investor confidence in the ability of local companies to seize the opportunity and drive innovation in the absence of OpenAI.