Starting April 1, ERNIE Bot, the company’s chatbot first released just a few months after OpenAI’s ChatGPT, will be free for all users, the company announced on Thursday.

The news helped send Baidu shares up by as much as 12% in Thursday Hong Kong trading. Gains were pared back in the afternoon, but shares still closed just over 5.5% higher.

Baidu’s shares have oscillated in recent days amid both good and bad news for the company’s AI plans. 

First, Baidu’s shares dipped on Wednesday after The Information reported that the company was struggling to meet Apple’s standards to help bring AI to Chinese iPhones. The iPhone maker was reportedly considering working with other companies like Alibaba. On Thursday, on a conference stage in Dubai, Joe Tsai, the e-commerce giant’s chairman, confirmed that Alibaba is working with Apple.  

Wednesday’s losses were erased after CNBC reported that Baidu would release an update to its ERNIE AI model some time this year.

Then, on Thursday, Baidu shares rose after its ERNIE Bot announcement, only to drop slightly after Tsai’s Dubai comments. 

Fierce competition threatens an early lead

Baidu was an early mover in China in the generative AI space. It released its flagship chatbot in March 2023, shortly after OpenAI released ChatGPT in November 2022.

But though it quickly racked up users, Baidu soon faced competition from other Chinese tech companies like Alibaba and ByteDance, which have since released their own generative AI applications.

Baidu’s current play to offer its chatbot for free to non-enterprise users could risk intensifying a price war in the industry.

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Prices for generative AI services dropped dramatically last year as tech companies resorted to deep discounts to win market share. In January, the price war intensified further in the wake of new releases from AI startup DeepSeek and ByteDance, which offered AI services at cut-rate prices.

In its Thursday announcement, Baidu suggested that “inference cost reductions” allowed it to release ERNIE Bot for free. The company also announced that a new “Deep Search” function, with “enhanced capabilities in thinking, planning, and tool calling” will also be released for free on April 1.

ERNIE Bot has a user base of some 430 million users as of November 2024, according to Baidu’s data. 

Clarification, Feb 13. 2025: This article has been updated to better reflect that Baidu is making its chatbot ERNIE Bot free for users.