Artificial intelligence companies in China start price war to market language models

Chinese artificial intelligence (AI) companies are locked in an intense price war as they try to find ways to commercialize their large language models (LLMs), according to analysts. Tencent Holdings is the latest tech giant to slash prices on its products.

The lite version of Tencent’s Hunyuan LLM model, the technology behind services like ChatGPT and other generative AI applications, will be free from now on. Additionally, prices for standard versions will be reduced by between 50% and 87.5%, according to an announcement made by the company’s cloud unit on Wednesday.

The pro version of Hunyuan will have a 70% reduction in the input cost, while maintaining the same charge for data output.

«The LLM sector is still in the process of increasing its capabilities. “Tencent Cloud will continue to offer competitive products and services to its customers,” the company stated in a statement.

Tencent’s announcement came just hours after iFlyTek significantly reduced the price of some versions of its Spark LLM model, while the lite version was also offered for free.

Tencent and iFlyTek join other tech giants in this price war in China, which began last week when ByteDance, owner of TikTok, launched Doubao AI models for businesses, with prices 99.8% lower than the GPT model -4 from OpenAI.

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Alibaba Group Holding, which owns the South China Morning Post, and Baidu quickly followed this week. Alibaba Cloud Intelligence reduced the price of its Qwen LLM model by up to 97% on Tuesday. That same day, Chinese search giant Baidu announced that its Ernie Speed ​​and Ernie Lite LLM models, launched earlier this year, would be available for free immediately.

The cloud services units of these big tech companies are cutting prices in hopes of exploring more effective ways to market their LLMs, said Zhang Yi, an analyst at technology research firm Canalys.

“Commercialization of AI models has always been a critical point for the industry, as it remains an unsolved problem to effectively implement and use the technology in real business scenarios,” Zhang noted.

Major AI players are reducing their prices to attract more customers and increase the use of LLM, which will contribute to a greater volume of training data and allow companies to improve the precision and accuracy of models, Zhang explained. .