(Bloomberg) — Baidu Inc. has taken the unprecedented step of declaring its Ernie AI chatbot free for users, a move that could help the Chinese search giant regain momentum in a race to develop next-generation artificial intelligence.
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Its chatbot — modeled on OpenAI’s ChatGPT — will be free for all individual users starting April, the company said in a WeChat post Thursday. Baidu’s stock extended gains in Hong Kong to climb more than 12%, its biggest intraday gain since October.
Baidu’s move threatens to intensify a pricing war that major domestic players from Alibaba Group Holding Ltd. to ByteDance Ltd. have waged since AI development quickened from 2023. While Baidu’s Ernie was among the first batch of generative AI platforms to win Beijing’s approval for public rollout, rivals including ByteDance’s Doubao have since gained more users.
In 2025, DeepSeek shook up the AI industry with a model trained at a fraction of the cost of both US and Chinese rivals. It’s now getting increasingly adopted by local agencies. Alibaba too has won over investors and users with an enhanced Qwen model that’s performed well against the likes of Meta Platforms Inc.’s Llama and DeepSeek’s V3 model in various tests.
What Bloomberg Intelligence Says
Baidu’s decision to cease charging for its once-market leading AI chatbot Ernie Bot highlights the intense monetization challenges in China’s AI sector. The firm’s decision to throw in the towel likely relates to the market disruption caused by DeepSeek, which has stormed the download charts in China. The development highlights the low barriers to entry in China’s cutthroat, commoditized AI sector, making it difficult for any one company to achieve dominant market share and pricing power.
– Robert Lea and Jasmine Lyu, analysts
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Baidu has notified users that the company will start returning monthly subscription fees paid for more advanced versions of Ernie, which cost $8 per month.
But like other big tech players, the company will still charge fees for enterprise clients accessing its AI through the company’s cloud services. Ernie-powered features remain key also to Baidu’s Office 365 equivalent, which offers paid premium services.
(Updates with share action from the second paragraph)
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