Baidu invests $140 million to foster generative AI startups

Baidu Inc. is investing 1 billion yuan ($140 million) to nurture Chinese startups that explore generative AI, leveraging its Ernie AI model to help drive innovation.
Daniel Lehewych
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Baidu Logo

"Baidu sign logo" by jonrussell is licensed under CC BY-SA 2.0.

Baidu Inc., China's internet search leader, is investing 1 billion yuan ($140 million) to incubate Chinese startups that focus on generative AI. As reported in Bloomberg, the move makes Baidu a part of the global investment wave centering on ChatGPT-like services.

Baidu's $140 Million Venture into Generative AI Startups

According to a statement released by Baidu, the investment will be used to foster projects utilizing its Ernie AI model, with funding potentially as high as 10 million yuan each. Venture investors, including IDG Capital, will evaluate pitches from founders, who will then create demo products before a decision on seed funding.

This incubation program merges one of China's top startup investment firms with its leading player in AI development. This represents another leap forward in China's aggressive AI investment strategy, catalyzed by the media buzz surrounding the debut of OpenAI's ChatGPT.

Baidu countered with its version of ChatGPT, dubbed Ernie Bot, sparking competition among rivals such as Alibaba Group Holding Ltd., Tencent Holdings Ltd., and SenseTime Group Inc. to unveil competing platforms. Baidu, in partnership with venture capitalists, will evaluate pitches from aspiring founders who plan to use Ernie to expand their services.

The Role of Ernie AI in China's Burgeoning AI Industry

"Large-language models will give birth to AI-native applications," said billionaire Baidu founder Robin Li at a recent event where he announced an upgrade to Ernie. "Baidu will become the first company to rework all of its products. It's not about integrating or accessing AI. It's about rework and restructuring."

But it's too soon to say if Ernie Bot could reach the "killer app" status, much like Tencent's omnipresent WeChat. China's leading internet regulator has stated that generative AI tools must pass security reviews before deployment. Furthermore, US sanctions have deprived Chinese tech firms of the best chips to train their AI models, potentially widening the divide between services like Ernie Bot and their Western counterparts.

Li unveiled Ernie Bot in March via a pre-recorded demo, leaving investors and analysts somewhat underwhelmed. While the Chinese chatbot received positive reviews among selected testers, Baidu's shares still show a roughly 20% drop from their February high. Despite these challenges, the company remains optimistic and committed to redefining the AI landscape with its latest project.

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