In the heat of AI competition, Chinese tech companies are wrestling each other to stake a dominant position in the industry. Their purpose is to outperform the San Francisco-based startup OpenAI’s current most sophisticated GPT-4 with their Chinese language chatbots. Although the outcomes are arguable there is one important benefit which states improved price competitiveness.
Price Wars and Offers
In the last 18 months, over 200 LLMs have emerged from China exclusively aiming to capture a slice of the conversation AI pie. Some of the most influential companies include ByteDance, the owner of TikTok, Baidu, an internet search firm, Alibaba Group Holding, an e-commerce firm, and Tencent Holdings, a social media firm that has reduced the prices of its LLM services. Some even provide many services for free.
ByteDance’s Doubao Pro is providing a paid model at an incredibly cheap price of 0.0008 yuan (around 0.011 US cents) for every 1,000 token prompt. This is a staggering 99.8% less than what OpenAI demands for accessing the GPT-4. Other LLOs such as Baidu, Alibaba, and Tencent have also lowered their LLM prices, thus making them affordable to the users.
Competitiveness and Price Differentiator
The price fall signifies that the competition is not about the quality of the models but the absence of it. Chinese firms have adopted competitively low prices to capture as many clients as possible, bypassing the luxury factor.
While the American technology companies “blitzscaling” and buy users as fast as they can to capture the market, Chinese organizations use the “walled garden” approach behind the Great Firewall to compete.
Constraints and Market Share
The restriction of export of advanced chips from Nvidia to China by Washington hinders AI model development. Overall, their buying power is even less than their highly liquid US counterparts in the corporate world.
The drop in prices for AI services from China is also a branding strategy as it targets to gain more clients. Finally, market share and mindshare emerge as strategic value drivers as the battle progresses.
Conclusion
The AI battle behind the Great Firewall is not just a battle of technology but a battle of prices as well. Amid an intensifying battle between Chinese technology titans, aggressive pricing strategies have altered the landscape. It remains to be seen whether this price war helps consumers or hinders innovation in the industry.
Image Source: Yahoo Finance
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