AI models have now become the new battleground in China's tech industry, with the four leading giants—Baidu, Alibaba, Tencent, and JD, or BATJ for short—all seeking to increase AI penetration and monetize traffic. In addition to search, video and text generation, AI is driving growth for these four giants as they use AI for ad placements.
The latest quarterly results show the impact of AI, with both JD and Alibaba reporting quarterly revenue growth of 7%, as early investments in AI technology begin yielding results.
Baidu's Ernie LLM at center of AI efforts
Baidu has achieved stellar results while staving off competition not just from major players such as Alibaba, Tencent, JD, and ByteDance, and from startups such as Moonshot AI, Zhipu, and Baichuan. For the first quarter of 2024, Baidu reported CNY 31.5 billion (US$4.44 billion) in revenue, better than market predictions of CNY 31.2 billion (US$4.39 billion), and a year-on-year increase of 1%. Net profit reached CNY 7 billion (US$987 million), growing by 22% year-on-year and far exceeding market estimates of CNY 5.57 billion (US$785 million).
With its core businesses remaining steady, Baidu will continue to grow its AI business through end-to-end optimization, says founder and CEO Robin Li. As Baidu seeks to transform user experiences into generative AI experiences, it is leveraging its Ernie Bot to revamp its search engine, with roughly 11% of search results now generated by AI. In Robin Li's opinion, search will most likely be the main killer app in the AI era.
Baidu has recently released lightweight LLMs, along with its AgentBuilder, AppBuilder, and ModelBuilder development tools that allow easy creation of original AI apps and customized models. As of mid-April 2024, the PaddlePaddle community counts 13 million developers, a result of the synergy created with its Ernie LLM.
JD blazing trail with AI-enhanced livestream shopping
JD reported higher-than-expected growth as well, with first-quarter revenue growing 7.0% year-on-year to CNY 260 billion (US$36.66 billion), and net profit growing 17.2% year-on-year to CNY 8.9 billion.
JD was the first online retailer in China to use AI in its livestream shopping shows, with the livestream debut of a digital avatar of its founder Richard Liu in April 2024 drawing more than 20 million views in an hour. Powered by its in-house ChatRhino LLM, JD's digital avatar technology has already been used by more than 4,000 merchants, boosting idle time conversion by roughly 30%. In addition, its Jingmai retail platform has allowed merchants to streamline operations with tools covering advertisement and promotion, storefront design, and smart customer services, while its AI-Generated Content (AIGC) service has helped reduce content generation costs for more than 70,000 merchants.
AI driving revenue growth for Tencent and Alibaba
Tencent's new "budding" businesses—video channels, mini-programs, and Software as a Service (SaaS)—have also been leveraging AI technology to improve the accuracy of ad recommendations. Driven by the above businesses, as well as its public merchant platform, Tencent's ad revenue grew by 26% year-on-year to CNY 26.5 billion (US$3.7 billion).
In addition, Tencent's various SaaS services, including its WeCom, Tencent Meeting, Tencent Docs, Tencent Cloud, and Tencent Marketing Solutions, have all been connected to its proprietary Hunyuan LLM, allowing AI-enhanced functionality.
Finally, during its recent earnings call, Alibaba CEO and director Eddie Wu expressed confidence that the company's AI-driven public cloud strategy will drive a return to double-digit revenue growth by the second half of 2025.
