Aniket PujariPictured here is the Ernie bot mobile interface, with the Baidu search engine home page in the background.
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Chinese tech giant Baidu has released two new artificial intelligence models as it vies to regain its leading position in the country’s fiercely competitive AI space.
The Baidu models launched Sunday included the company’s first reasoning-focused model, as well as its first move into an open-source licensing strategy.
However, experts told CNBC that while the release of the models is a positive development for Baidu, they also highlight how it is playing catch up as its Ernie bot — one of China’s earliest versions of a ChatGPT-like chatbot — struggles to gain widespread adoption.
“The new models make Baidu more competitive since the company has been lagging behind in a reasoning model release,” Lian Jye Su, chief analyst at Omdia, told CNBC.
A reasoning model is a large language model that breaks down tasks into smaller pieces and considers multiple approaches before generating a response. It is designed to process complex problems in a similar way to humans.
Chinese startup DeepSeek upended the global AI race and transformed China’s ecosystem in January when it released its R1 reasoning model, which rivaled American competitors despite costing a fraction of the price.
Baidu has said its new ERNIE X1 reasoning model “delivers performance on par with DeepSeek R1 at only half the price,” and has “stronger understanding, planning, reflection, and evolution capabilities.” CNBC has not been able to independently verify this claim.
According to Wei Sun, principal analyst of artificial intelligence at Counterpoint Research, Baidu’s future competitiveness could hinge on whether its new models deliver on the promised performance and cost advantages.
“Baidu is clearly in catch-up mode, largely due to its slow innovation pace and underestimating rapid shifts in market dynamics,” Sun said.
What happened?
Baidu rolled out its first generative AI platform to the public in 2023, giving China one of its first answers to OpenAI’s popular AI chatbot ChatGPT.
However, despite initial momentum, Baidu’s Ernie product has since been eclipsed by competitors including startups as well as large-tech companies such as Alibaba and ByteDance.
Experts list a number of reasons for Baidu’s struggles and slow rate of innovation.
“Baidu fell behind when they tried to build proprietary models and compete for funding for AI,” Ray Wang, principal analyst and founder of Constellation Research, told CNBC. He added that the company has also suffered from recent government crackdowns and was distracted by “regulatory nonsense.”
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Proprietary models keep their source code and underlying architecture confidential, in contrast to models from the likes of DeepSeek, whose source code is made freely available on the open web for possible modification and redistribution.
“Using a closed-source approach means that [Baidu] was training its model from scratch whereas the open-source models were able to leverage certain parts that were communal to developers,” said Kai Wang, a senior equity analyst for Morningstar.
Baidu’s latest AI models, however, represent a shift in the company’s strategy toward open and free models.
“Baidu has always been very supportive of its proprietary business model and was vocal against open source, but disruptors like DeepSeek have proven that open source models can be as competitive,” said Omdia’s Su.
He added that Baidu is “merely following the footstep” of its biggest competitors in China, namely Alibaba, DeepSeek, and Tencent, which have all now released open-source models.
Baidu’s advantages
According to Morningstar’s Wang, AI players like Baidu are coming up with new models every month or so, with competitors constantly trying to outperform each advancement.
However, “the differentiator in the Chinese models remains the data used for the models, and the application use-case,” Wang said.
In these areas, experts see some key advantages for Baidu, which operates a wide range of popular applications and services, including its flagship search engine, which offers access to AI tools, as well as its online forum app, Baidu Tieba.
“Due to its large user base in the consumer space, particularly in AI search and recommendation systems, the company can still maintain its market leadership position as long as it keeps up with the innovation cycle,” said Omdia’s Su.
During an earnings call late last year, Baidu CEO Robin Li said he expects generative AI to turn Baidu search into the “new killer app in the age of AI.”
“The secret to AI is data, chips, good math, and cheap energy … You have to have data to play. They have the data,” said Constellation Research’s Wang.
