AI price war kicks off in China after Alibaba slashes prices

Representational image of a dynamic computer network.
(Image credit: / Fit Ztudio)

After dramatically reducing prices for a selection of its artificial intelligence services by as much as 97%, Alibaba has prompted similar responses from other AI service providers in China, marking the beginning 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 revealed its AI services pricing, claiming that they were up to 99% cheaper than the Chinese industry standard.

AI price wars are intensifying in China

The aggressive pricing strategies are the opening moves in an AI sector battle that’s quickly heating up, with companies fighting to attract investments and customers.

The price cuts are hardly what you’d call unexpected, though, with Chinese tech firms having a long history of discounting across various markets in order to remain competitive. Recently, Alibaba initiated a series of price cuts in cloud computing, offering discounts of up to 55% on over 100 domestic services, fueling similar responses from rival companies.

Analysts at Bloomberg Intelligence claim the burgeoning war could further disrupt China’s AI market, even triggering a broader price war across other services as well as in other countries.

China’s AI efforts have had a small impact globally – a direct result of the geopolitical tensions and efforts by the likes of the US government to put an end to certain trading.

However, tech companies worldwide are also being forced to think up new pricing strategies. AWS, Microsoft and Google Cloud, which collectively account for around two-thirds of the cloud market, all recently dropped egress fees in order to pacify antitrust regulators.

More from TechRadar Pro

Craig Hale

With several years’ experience freelancing in tech and automotive circles, Craig’s specific interests lie in technology that is designed to better our lives, including AI and ML, productivity aids, and smart fitness. He is also passionate about cars and the decarbonisation of personal transportation. As an avid bargain-hunter, you can be sure that any deal Craig finds is top value!