Shares of Baidu plummet to an 8-week low after ChatGPT rival is unveiled

Baidu, a Chinese tech company, unveiled its Chinese-language alternative to ChatGPT on Thursday but warned of its flaws.

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During a live-streamed release event, Baidu CEO Robin Li emphasized that the company's new product - called the Ernie bot - is far from perfect. As Chinese stocks fell across the board in Hong Kong on Tuesday, their lowest close since January 19 was recorded, amid a wider fall for Asian stocks.

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Using users' feedback to improve the product was Li's main point.

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Baidu is prioritizing access to the Ernie bot for 650 ecosystem business partners, which include media companies, banks, and car firms. Users of Baidu's AI cloud can request access to Ernie bot's API, which is integrated into its enterprise cloud.

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Baidu announced that 30,000 corporate clients had joined the waitlist for the Ernie bot within one hour of its announcement. Access was not immediately granted to Trade Algo, other media, and the general public.

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This week, Microsoft-backed OpenAI announced GPT-4, the latest version of its highly popular ChatGPT chatbot. As of November, the bot was free for the public, but $20 a month is required for access to GPT-4.

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Using ChatGPT, you can generate everything from product summaries to business proposals in a human-like manner.

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ChatGPT is free, but Microsoft's Bing AI chatbot - which uses OpenAI technology - that launched last month had to be added to a waitlist. There have been reports of creepy experiences from some users.

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Baidu's Li told Trade Algo that the Ernie bot had similar issues if it was used all the time and that it wasn't perfect. In spite of this, he pointed out that the model has been trained on a set of 550 billion facts.

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“The AI isn't meant to highlight rivalry between the U.S. and China, but rather to showcase Baidu's efforts to "change the world through technology," Li said in Mandarin.

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As of now, Baidu shares traded in Hong Kong have gained 12% for the year.

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Alphabet's Class A shares are up nearly 9% so far this year, while Microsoft shares are up nearly 11%.

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Even though ChatGPT is not officially available in China, it has caught the attention of locals. Despite not having the same level of Chinese-language support as in English, ChatGPT does support Chinese.

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Beijing has pushed for national self-sufficiency in technology, while censorship and data regulation have increased.

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Baidu is not the only Chinese company developing similar technology.

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Li told analysts on an earnings call in February that Baidu's version - the Ernie bot - would be embedded into the company's search engine in March.

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Li said that the company would also use AI for the creation of content. IQiyi is a major video streaming platform in China backed by Baidu.

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In terms of AI and bot capabilities, it was unclear how Baidu's Ernie bot compared with ChatGPT's.

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Earlier this week, OpenAI announced that its GPT-4 can outperform 90% of humans on the SAT, a college admissions exam in the United States.