Chinese tech giants Alibaba and Baidu slashed prices on Tuesday for their large-language models (LLMs) used in generative artificial intelligence, intensifying a price war in China’s cloud computing sector.
Alibaba’s cloud unit announced price reductions of up to 97% on various Tongyi Qwen LLMs. The Qwen-Long model, for example, now costs only 0.0005 yuan per 1,000 tokens, a significant drop from 0.02 yuan per 1,000 tokens.
Baidu quickly followed Alibaba’s lead by announcing that its Ernie Speed and Ernie Lite models would be free for all business users, marking a significant shift in the competitive landscape.
The price war in China’s cloud computing space has been escalating over the past few months, with both Alibaba and Tencent previously lowering their cloud service prices.
Chinese cloud vendors have increasingly relied on AI chatbot services to boost sales, spurred by the success of U.S.-based OpenAI’s ChatGPT in late 2022.
The competition has now extended to LLMs, impacting profit margins for companies involved. Baidu’s Ernie Lite and Ernie Speed, which had been paid services since their March release, are now free for business users.
Last week, Bytedance announced that its Doubao LLMs would be priced 99.3% lower than the industry average for business users, highlighting the aggressive pricing strategies in the sector.