After dramatically slashing prices for a selection of its artificial intelligence services by as much as 97%, Alibaba has drawn similar responses from other AI service providers in China, marking the start of a price war in the republic’s emerging AI market .
Baidu Cloud has now also announced that it would offer free services based on its Ernie AI models, just hours after Alibaba unveiled discounts on nine of its products built on the Tongyi Qianwen platform.
Last week, TikTok parent company ByteDance announced the prices of AI services, claiming they were up to 99% cheaper than the Chinese industry standard.
AI price wars are heating up in China
The aggressive pricing strategies are the opening moves in a battle in the AI sector that is rapidly heating up, with companies fighting to attract investment and customers.
However, the price cuts are not exactly unexpected as Chinese tech companies have a long history of discounting across markets to stay competitive. Recently, Alibaba initiated a series of price cuts in cloud computing, offering discounts of up to 55% on more than 100 domestic services, sparking similar responses from rival companies.
Analysts at Bloomberg Intelligence argue that the burgeoning war could further disrupt China’s AI market, and even lead to a broader price war among other services and in other countries.
China’s efforts in AI have had a small impact globally – a direct result of geopolitical tensions and attempts by the US government, among others, to put an end to certain trading activities.
But technology companies worldwide are also forced to devise new pricing strategies. AWS, Microsoft and Google Cloud, which together account for about two-thirds of the cloud market, all recently cut outbound costs to appease antitrust regulators.