Chinese tech giant Baidu rolled out two new, free-to-use artificial intelligence models on Sunday, marking its latest effort to catch up in China’s rapidly evolving AI landscape. The releases included the company’s inaugural reasoning-focused model. While experts have reacted positively to the new models, they also highlight the challenges Baidu faces in this competitive arena.
“Baidu is clearly in catch-up mode, largely due to its slow innovation pace and underestimating rapid shifts in market dynamics,” explained Wei Sun, principal analyst of artificial intelligence at Counterpoint Research. Baidu’s new reasoning model, ERNIE X1, is designed to break down complex tasks and consider multiple approaches, similar to human thought processes. The company claims its model delivers performance comparable to DeepSeek R1, a competing model from the startup DeepSeek, but at half the cost.
Baidu’s new models come as the company plans to transition towards an open-source strategy. However, some in the industry see this as a reactive move. Lian Jye Su, chief analyst at Omdia, told CNBC that despite being a positive development, the new models reveal that Baidu is playing catch-up in the market.
Baidu has faced challenges since launching its first generative AI platform to the public in 2023, one of China’s first responses to OpenAI’s ChatGPT. Baidu’s Ernie product has been surpassed by competitors, including AI models from startups and large tech companies like Alibaba and ByteDance. Experts cite issues with Baidu’s innovation pace and its approach to model development.
Ray Wang, principal analyst and founder of Constellation Research, told CNBC that Baidu fell behind by building proprietary models and competing for AI funding. He added that the company has also been affected by government crackdowns.
“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 has announced that it will open-source its next-generation AI model, Ernie, starting June 30, according to Reuters.
Omdia’s Su noted that Baidu is “merely following the footstep” of its biggest competitors in China, which have already released open-source models. Morningstar’s Wang suggests that the key differentiator in Chinese AI models is the data they use and their application use cases. Baidu benefits from a wide range of popular applications and services, including its search engine, which gives it the potential to maintain its position.
During an earnings call last year, Baidu CEO Robin Li expressed his expectation that generative AI would make Baidu Search the “new killer app in the age of AI.” As Wang from Constellation Research put it, “The secret to AI is data, chips, good math, and cheap energy … You have to have data to play. They have the data.”
