Chinese tech giants cut prices on language models used to power AI chatbots

By Liam Mo and Eduardo Baptista

BEIJING (Reuters) – Chinese tech giants Alibaba and Baidu on Tuesday cut prices on large language models (LLMs) used to power generative artificial intelligence products, as a price war rages in the cloud computing sector heats up in China.

Alibaba’s cloud unit has announced price cuts of up to 97% on a range of its Tongyi Qwen LLMs. Its Qwen-Long model, for example, will cost just 0.0005 yuan per 1,000 tokens – or units of data processed by LLM – after the price cut, down from 0.02 yuan per 1,000 tokens.

It was quickly followed by Baidu, which hours later announced that its Ernie Speed ​​and Ernie Lite models would be free for all business users.

A price war in China’s cloud computing space has been ongoing in recent months, with Alibaba and Tencent recently lowering prices for their cloud computing services.

Many Chinese cloud vendors have relied on AI chatbot services to boost sales, after China saw a wave of investment in large language models in response to the successful debut of US-based OpenAI’s ChatGPT at the end of 2022.

The price war in China’s cloud computing space has now hit the big language models that power these chatbots, threatening to cut into companies’ profit margins.

Baidu’s Ernie Lite and Ernie Speed ​​launched in March, and as of Tuesday, enterprise customers were paying to use them.

Bytedance announced last week that the flagship model of its Doubao LLMs would be priced 99.3% lower than the industry average for enterprise users.

Chinese LLM developers have focused on charging companies as a way to monetize their investments in LLMs.

Some have also started targeting individual users. Chinese startup Moonshot recently launched a tipping feature where business and individual users can pay to prioritize the use of its chatbot services.

Baidu was the first company in China to offer its LLM products to paying consumers, charging 59 yuan per month for those who want to use its more advanced Ernie 4 model.

(Reporting by Liam Mo and Eduardo Baptista; Editing by Susan Fenton)