Shares in Chinese search giant Baidu surged as much as 11.7% in Hong Kong on Thursday after it announced it will make its AI chatbot free of charge starting April 1.
Listed on both the Nasdaq and in Hong Kong, the company said users will have free access to the Ernie Bot thanks to continued technological upgrades and lowered costs, according to a Thursday press statement. Fees will no longer be charged to access some of the chatbot’s advanced features based on Baidu’s latest AI model. They include enhanced search capabilities and conversations in multiple languages, according to the statement.
In late 2023, Baidu started charging a monthly fee starting from 49.9 yuan ($6.80) for the advanced version of Ernie. The decision to go free may help Baidu grab market share in China’s hugely competitive AI market, Shen Meng, a Beijing-based managing director of boutique investment bank Chanson & Co., says via WeChat.
The Beijing-based company is one of the earliest Chinese technology giants to release a ChatGPT-like service, which according to Baidu had 430 million users as of November 2024. It has recently been eclipsed by competitors such as DeepSeek, which shocked Silicon Valley with its January release of a highly cost-effective AI model. It also lost a valuable partnership with Apple to fellow tech giant Alibaba, which was widely reported to be working with the American company on tailored AI services for iPhone users in China. Alibaba Chairman Joe Tsai confirmed the partnership on Thursday at the World Governments Summit in Dubai.
Chatbots operated by Baidu’s competitors are mostly already free, although many charge businesses and developers to access the underlying model to build services based on it. Making its chatbot product free might help Baidu better train its AI model, as increased usage would lead to the gathering of more data, Shen says.
But Charlie Chai, a Shanghai-based analyst at research firm 86Research, sounds a note of caution.
“We remind investors that Earnie Bot remains in a relatively defensive position—not only significantly behind DeepSeek in daily active users (30+ million) but also trailing ByteDance’s Doubao and Moonshot’s Kimi,” he says by WeChat. “Unless Baidu’s product provides exceptional services, offering free services in April may have limited impact in this regard.”
