ChatGPT clones are preparing to take over China

 The conversational artificial-intelligence tool seems to be taking over the world—and that now includes the Chinese stock market (Photo: AFP)
The conversational artificial-intelligence tool seems to be taking over the world—and that now includes the Chinese stock market (Photo: AFP)

Summary

Baidu and Alibaba are both jumping on the advanced-chatbot bandwagon. The technology could be a big deal in China—but that comes with its own dangers

This column isn’t written by ChatGPT. At least not yet. But the conversational artificial-intelligence tool seems to be taking over the world—and that now includes the Chinese stock market.

Investors should be careful not to get ahead of themselves, however.

AI is a different political ballgame in China than e-commerce or online finance, but the country has just emerged from a multiyear crackdown on internet-platform companies—in part, because they became too powerful and ubiquitous. At the very least, such a potentially transformative new technology seems likely to quickly become a subject of significant regulatory concern.

The launch of ChatGPT by Microsoft-backed OpenAI a few months ago has sparked a race among U.S. online-search and software giants. On Tuesday, Microsoft said it would incorporate the AI tool into its Bing search engine and Edge web browser. Search market leader Google says it will launch its own version of an AI chatbot called Bard.

Across the Pacific, Chinese companies are jumping on the bandwagon too. China’s search giant Baidu said on Tuesday that it will unveil its own conversational AI tool called Ernie Bot after completing internal testing in March. Alibaba, China’s e-commerce leader, said on Wednesday it is also testing its own ChatGPT-style tool.

Baidu’s shares jumped 15% in Hong Kong on Tuesday on the news. The stock has since given up some of those gains, but it has gained 36% this year so far, outperforming other Chinese stocks: the CSI 300 mainland benchmark is up only 7%. AI-related stocks listed in China, meanwhile, have surged to the stratosphere. Shares of Shenzhen-listed Hanwang Technology, which makes products for use in character recognition, have more than doubled in 2023. Shares of Shanghai-listed Beijing Haitian Ruisheng Science Technology, which develops training data sets for AI, have tripled.

It is easy to see how chatbots could be integrated into tech giants’ businesses. Bots may, for example, improve the search interface for Baidu’s users. The ability of ChatGPT to draft convincingly human essays could enhance productivity tools. Tech giants with their enormous troves of data and AI research are well-placed to capitalize on the new technology.

But it is still too early to tell how much revenue such chatbots will really bring into corporate coffers. For one, competition will be intense: It’s already clear that many major internet-platform companies could end up as contenders. AI-powered chatbots could help improve existing services, but may not create new, stand-alone revenue streams. And integrating chatbots into existing platforms may incur significant costs.

Regulation could be another issue, especially in China, given its strict data-security laws. While the government will probably initially be supportive because dominance in AI is such a high policy priority for Beijing, widespread use of the tool by the public will still be scrutinized. Its use may be restricted in settings like education. And if advanced chatbot technology starts bumping up against some of Beijing’s sore spots—for example, online financial fraud or politics—one can imagine a swift and sure regulatory response.

When asked to write a short sentence on investing in the latest fads, ChatGPT said it “can be risky and they may not have a solid track record and can quickly lose popularity." Investors would be wise, in this case, to take it at its word.

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