Baidu's Ernie Bot: Trying to Ern the Chatbot Crown *
How Baidu was first to launch an AIGC tool and how everybody and his dog followed for what looks like will be the 'war of a thousand bots'.
*a title based on a ChatGPT suggestion, judge for yourself 😉
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Please note that chapters 2 and 3 are only available to paying subscribers.
Things that caught our attention
Tencent Punishes Multiple Executives for WeChat and QQ Malfunctions at the End of March This cooling system malfunction sounds a lot like the situation at Alibaba Cloud, included in the article we published last month.
An interesting look (link in Chinese) at Temu and the horseracing organization at Pinduoduo/Temu. "Many people in the industry believe that, regardless of external factors such as policies, Temu will reach a scale of 100 billion U.S. dollars within two years." We wrote about Temu in December, and Ed wrote an update on ChinaTalk.nl in January.
1: 1688, Taote, clothing industry, etc. (variety)
2: 5 major industries such as electrical appliances and fast-moving consumer products (brands)
3: Tmall Supermarket, Taocaicai, and Taoxianda (supermarket)
Supply chain management is consolidated while user operation and platform strategy remain in place.
Yang Guang, vice president of Alibaba Group and president of Taobao Tmall Industry Development and Operation Center, has resigned. (link in Chinese)
Meituan will launch group-buying delivery services in more than 20 cities on April 17. [source] An insider close to Meituan revealed: “If Douyin has it, Meituan must also have it.” To read more about the fight between Meituan and Douyin in local services, check out our last month’s deep dive.
We were also cited in these recent articles:
The Guardian, April 12, 2023. As the west tries to limit TikTok’s reach, what about China’s other apps?
BBC, March 29, 2023. Alibaba: China tech giant shares jump after breakup plan announced
Tech Monitor, March 27, 2023. Baidu moves Ernie chatbot launch behind closed doors.
In Chapter 1, we summarize the events leading up to the launch of Baidu’s Ernie Bot. This chapter is available to all subscribers. Chapter 2 contains exclusive information about Ernie’s place in Baidu’s strategy as gathered from expert interviews in the Six Degrees Intelligence database. Chapter 3 summarizes the initiatives of other Chinese companies in the AIGC space, how they are performing, the necessary building blocks and AIGC legislation in the making. The information in this chapter is partially gathered from Chinese language tech media. Chapters 2 and 3 are only available to paying subscribers.
Note: in this newsletter, to avoid confusion, we will refer to ‘Wenxin’ when we talk about the underlying LLM model and ‘Ernie Bot’ when talking about the application.
Although the pre-recorded launch of Ernie Bot, Baidu’s answer to ChatGPT, in March 2023 was ridiculed by some media and led to a 6% drop in stock price, beta users have come out and said that it performs comparably on some tasks as OpenAI’s product, in Chinese anyway, and has the added benefit of being multi-modal. (Also, let’s not forget that Google suffered much the same fate with its unveiling of Bard.)
While Baidu is demonstrably behind OpenAI in terms of the raw power of its models (two years if you ask industry and two months if you ask Robin Li), it is the frontrunner in China thus far when it comes to LLMs because of its sustained research in this area.
Ernie Bot plans to primarily monetize by delivering solutions to enterprises, especially very large corporations and SOEs. It is using ChatGPT’s business model as reference. Revenue expectation for 2023 is up to 1Bn RMB.
The prohibitive costs of model training ongoing inference give those with large existing AI GPU computing power – generally Big Tech with significant cloud divisions or partners – a leg up versus independent players.
While top of line Nvidia chips are no longer available for sale to China due to export controls, less powerful versions as well as Chinese home grown AI GPUs can satisfy China’s demand for now, not to mention the availability of AI computing in international cloud services, although that is too expensive to be useful to all but the best-funded companies.
Chapter 1 – Launching Baidu’s Ernie Bot
“We have such cool technology, but can we turn it into a product that everyone needs?” – Robin Li, Baidu founder & CEO, December 2022 at an internal meeting
In an internal meeting in December 2022, Robin Li used ChatGPT as an example of how Baidu could take the lead in AIGC (Artificial Intelligence Generated Content). A few weeks later, on January 30th, Bloomberg reported that Baidu would debut an AI chatbot service comparable to that same ChatGPT in March and how it would be embedded in Baidu’s main search services.
Wenxin (or ‘Ernie’ in English; Enhanced Representation through Knowledge Integration, just another in a series of muppet-named models such as Google’s BERT and Allen Institute’s ELMo), Baidu’s large-scale machine learning model, which it had been training for several years, would be the basis for the tool.
Like ChatGPT’s foundation GPT-3, Wenxin, originally developed in 2019, is based on a Google breakthrough in algorithms from 2017 called the transformer. Baidu initially used it to improve its search results. Since then, Baidu has developed dozens of Wenxin models and extended functionality to image and art generation comparable to OpenAI’s Dall-E. 
As such, it was no big surprise that, in early February, Baidu announced the ChatGPT-like tool would be called Ernie Bot in English and Wenxin Yiyan (文心一言) in Chinese. Baidu said that the launch date could be sooner than planned now that Google and Microsoft were speeding up their developments after the launch of ChatGPT in November 2022.
Baidu has trained Ernie Bot on Chinese and English language sources inside and outside China, like it previously used Wikipedia, BookCorpus, Reddit, and Baidu’s own products like Baidu Baike and Baidu News for the underlying Wenxin system. 
The promise of Ernie Bot
During an earnings call on the 22nd of February, Robin Li elaborated on Baidu’s plans. 
“We will embed Ernie Bot into Baidu Search first and will open it to the public in March. (..) We launched [Wenxin] early in March 2019 and have scaled it up with well over 100 billion parameters. It is trained by serving billions of user search requests and other applications every day. (..) Wenxin is considered a state-of-the-art Chinese language model. And it is not only about language but also about understanding Chinese culture.”
“We're working hard on a revolutionary version of Baidu Search built upon Ernie Bot that incorporates generative AI into our search algorithm, as well as content creation. And we are adding interactive features, too. (..) It would (..) upgrade the traditional search experience and attract more users.”
“ChatGPT type of features could potentially become a new traffic entry point for internet users and, therefore, expand the market size of search.”
“By opening the generative large language model to the public (..) we should help many business owners and entrepreneurs with their own models and applications on our cloud, and bring about (..) increased efficiency, better decision making, and improved customer experiences.”
“(..) We are building an AI ecosystem around Ernie Bot. As of today, a number of organizations have already decided to integrate Ernie Bot into their products and services.”
Sounds good, right? But in one of his earlier speeches, Robin Li had mentioned that incorporating ChatGPT-like tools in search scenarios would be more difficult to explore than the underlying technology itself. Still, AIGC is expected to revolutionize search, so logically, Baidu sees the potential … or potential threat if it would replace traditional search engines. According to China Star Market , ChatGPT often gives more ‘reliable’ results than conventional Chinese search engines. While this might say more about these search engines than about ChatGPT, there is no doubt that this new technology could undermine Baidu.
Ernie Bot was first demonstrated to the public on March 16th.
Well, sort of...
Five usage scenarios were presented: literary creation, commercial copywriting creation, mathematical calculation, Chinese comprehension, and multimodal generation. But the presentation was disappointing as it just featured pre-recorded videos and no live demo.
Staff of Baidu had been reported to be working around the clock and denied leave for the Chinese New Year in order to make the March 16th deadline.  In his presentation, Robin Li mentioned: “During our initial testing internally, we experienced the capabilities of Ernie Bot, and I feel that it’s not perfect yet. So why are we unveiling it today? Because the market demands it.”
Unlike OpenAI, which opened ChatGPT to the general public in November, and despite Robin Li’s promise to open Ernie Bot to the public in March, Baidu only made Ernie Bot available to a group of invited users. Baidu’s share prices, which had previously risen upon the announcement of the Ernie Bot launch event, went down as much as 10% while Li presented and eventually closed 6.4% lower. 
Within two weeks after the disappointing Ernie Bot launch, Baidu announced another product launch event for Ernie-bot integrated cloud services. Baidu also announced that 21 firms had signed cooperation agreements related to Ernie Bot, and more than 100,000 had applied for an application programming interface for the AI tool.  The announced press conference was changed to a closed-door event for corporate clients to ‘better meet the strong needs of existing customers’. 
And so, on March 27th, Baidu launched Wenxin Qianfan (文心千帆), offering enterprise-level large-scale language model services.  According to Caijing, ‘it includes not only Ernie Bot, but also Baidu's full set of Wenxin large-scale models and the corresponding development tool chain.’ In the future, it would also support third-party open-source large models.
In a live demo, Wenxin Qianfan was able to generate a Powerpoint presentation, digital hosts for live commerce, and book flights and hotels. It would charge 0,12 yuan per 1,000 tokens, and the payment is based on the total number of words input and output of the call.
Chapter 2: Baidu’s Plans for Ernie
To reiterate, Baidu's Wenxin and Ernie Bot bear a resemblance to the dynamic between GPT-3 and ChatGPT. Wenxin serves as the fundamental model, while Ernie Bot is the chatbot application built on top of Wenxin's capabilities.
The team responsible for developing Ernie Bot was formed at the end of last year, with the vision of capitalizing on the rapid growth of OpenAI's ChatGPT. Ernie currently has one of the highest priorities within the company as evidenced by the fact that Wang Haifeng, the current CTO of Baidu, has been appointed as project leader. The current team for Wenxin is about 300-400 individuals, plus approximately 100 individuals in ACD cloud, and 200-300 additional people across various business departments such as search architecture and DuerOS strategy.