After the anticipation of increased profits from the prominent Chinese tech giant, Baidu, the company’s shares surged by almost 4.5% during Wednesday’s trading session in Hong Kong. Baidu, which unveiled its ERNIE App earlier this year, akin to ChatGPT, is striving to gain an early advantage in the competition to dominate China’s AI industry.
In the three months leading up to September 30, Baidu recorded a revenue of \(4.7 billion, marking a 6% year-over-year increase. Moreover, the company achieved a net income of \)916 million, a significant improvement from the $26.6 million loss in the previous quarter.
CEO Robin Li, in a statement released on Tuesday, expressed confidence in the company’s AI-driven strategies, envisioning sustained revenue and profit growth through ERNIE over the coming years.
Facing stiff competition from rivals like Tencent and Alibaba, Baidu, under the leadership of its founders, is banking on AI to regain lost ground. Traditionally recognized for its search engine, Baidu is now diversifying into emerging sectors such as conceptual AI and autonomous driving technology.
Although Baidu introduced ERNIE earlier this year, its demonstration fell short compared to global counterparts like Google and Microsoft. Nonetheless, the company has been diligently upgrading its technology, launching ERNIE 4.0 in October.
Furthermore, Baidu provided insights into its Apollo Go robotaxi service, operational in Beijing, Wuhan, and Shenzhen. The autonomous ride-hailing service transported 821,000 passengers in the last quarter, reflecting a 73% increase from the previous year.
AI Landscape in China
Baidu stands out as the sole Chinese entity featured in Fortune’s inaugural “AI Innovators” list, comprising 50 trailblazing AI companies. This recognition aligns with the trend in China’s tech industry towards introducing innovative AI solutions.
Baidu’s ERNIE app emerges as a formidable counterpart to OpenAI’s ChatGPT, which is presently restricted in China. Baidu asserts that its app surpasses ChatGPT in various Chinese language tasks.
Nevertheless, Baidu’s major tech rivals are swiftly entering this domain. JD.com, Tencent, and Alibaba have all unveiled substantial speech models of their own. Notably, Sandy Xu Ran, CEO of JD.com, has been appointed as an independent director on Baidu’s board, as announced by the company. China is currently witnessing the development of over 130 significant language models, with numerous smaller AI enterprises and startups also contributing to this ecosystem.
However, Chinese AI firms must comply with Beijing’s regulations, ensuring alignment with “core socialist values” and national security. Foreign developers are mandated to adhere to these guidelines, emphasizing the importance of technology while also facing stricter penalties for non-compliance.
Additionally, U.S. restrictions on advanced AI chip procurement pose a challenge to Chinese companies. Alibaba, for instance, postponed its plans to spin off its cloud computing division due to uncertainties stemming from U.S. export controls.
CEO Li cautioned that these constraints could lead to the consolidation of major speech models in China. Baidu, he emphasized, has a wealth of AI capabilities ready for the future.
Ethical Considerations
The primary challenges confronting China’s AI sector revolve around regulatory frameworks and chip accessibility, overshadowing concerns about safety and existential threats posed by the technology. The recent upheaval at OpenAI, where Sam Altman was initially dismissed and later reinstated as CEO, underscores the industry’s evolving landscape and the need for responsible AI deployment.
In China, discussions regarding AI’s existential risks are predominantly driven by governmental initiatives, focusing on practical enterprise applications of generative AI rather than theoretical concerns. Baidu’s establishment of an ethics committee in October signals a proactive approach to guiding ethical practices within the tech industry, reflecting a broader commitment to responsible AI development.
