Baidu Launches Its Answer To ChatGPT, But Shares Take A Tumble

Billionaire and Baidu CEO Robin Li on Thursday officially unveiled the Chinese search giant’s answer to ChatGPT, as his company seeks to outdo domestic competitors in developing conversational artificial intelligence technologies, which have recently taken the world’s second largest economy by storm.

At a highly anticipated event at Baidu’s Beijing headquarters, the 54-year-old Li walked onto the stage and displayed the company’s chatbot service, Ernie Bot. But instead of a live demo, the audience was only shown videos of Ernie Bot performing a range of prepared and pre-recorded tasks, including answering questions about a popular novelist, composing press releases as well as working on mathematics problems.

So attendees weren’t given a chance to interact with Ernie Bot in real-time, though the company said the service will be available to a selected group of users starting on Thursday. Baidu shareholders were not impressed by the launch; its Hong Kong-listed shares fell as much as 10% in afternoon trading, before paring losses for the day to 6.4%.

“During our internal tests and from what I have experienced, our bot can’t be called perfect,” said Li. “But why are we launching it now? This is because we have seen market demand.”

Kenny Ng, a Hong Kong-based securities strategist at Everbright Securities, says the market initially had “very high” hopes for Baidu, whose shares rallied when it was first revealed that the company was working on a ChatGPT-style project. Li, who currently has a net worth of $7.8 billion, has a lot at stake. During a February analyst call, he said Ernie Bot would be gradually integrated with a range of Baidu’s services, starting from search engine and later with its iQiyi video site.

The mogul is banking on AI to diversify and revitalize growth, as Baidu in recent years has fallen behind rivals in market influence. In the fourth quarter of last year, the company generated better-than-expected $4.8 billion in revenue, but more than half of sales came from online marketing. As China’s economic growth slows, the sector has seen even more cut- throat competition as the likes of gaming and social media giant Tencent and Tik Tok owner ByteDance seek to lure brands onto their own platforms.

Baidu, in a press release, said Ernie Bot excels at areas including business writing and understanding Chinese language. Li says the bot will become better after receiving user feedback, which will in theory allow the company to train the algorithm to meet their demands. Ernie Bot’s launch took place just two days after OpenAI unveiled ChatGPT-4, which builds on its predecessor ChatGPT but comes with even more powerful functions such as processing not just text but pictures. Backed by Microsoft, OpenAI says it has also trained the latest version to be safer, and avoid giving answers that could be deemed misleading or inappropriate.

But the upstart hasn’t made its service available in China, where Baidu’s domestic rivals from Tencent to e-commerce behemoth Alibaba are all playing catch-up and racing to develop ChatGPT-style projects. Li didn’t touch on the legal aspect, but any similar service from the country is expected to steer away from sensitive topics and conform to strict local rules. According to a recent test run by the Wall Street Journal, a number of chatbots from Baidu’s smaller rivals already refused to answer questions about the Chinese leadership.