China’s Tech Companies Are Joining The Hyped-Up Race To Develop ChatGPT-Style Services

China’s internet companies are racing to develop their own versions of ChatGPT-style services amid the global frenzy around the conversational AI chatbot, but questions are emerging whether they can replicate the success of their U.S. rival.

At least five technology companies, ranging from Jack Ma’s e-commerce giant Alibaba to Robin Li’s search engine operator Baidu, have announced over the past few days that they are working on a tool similar to ChatGPT. An Alibaba spokesperson, for example, confirmed Wednesday morning that the company is now conducting internal tests on a ChatGPT-style bot, while Baidu said three days ago that it’s on track to officially roll out what it calls Ernie Bot in March.

Details of the new services weren’t immediately known, but what is clear is that these companies are capitalizing on the sudden interest over conversational AI technologies. Developed by San Francisco-based OpenAI, ChatGPT is expected to revolutionize internet searches by offering users information via human-like conversations.

But the innovative tool, which enabled OpenAI to pull in a $10 billion investment from Microsoft last month and will be incorporated into the tech giant’s search engine Bing, isn’t available in China yet. Merchants on Alibaba’s Taobao platform were peddling services that help people register OpenAI accounts for less than five yuan ($0.74) each, with one vendor selling more than 80 such accounts within the past month, a search on Taobao shows.

Developing a Chinese version, however, may lead to legal complications, according to Ke Yan, head of research at Singapore-based DZT Research. Laws in mainland China are still “quite ambiguous” when it comes to data and privacy protection, potentially giving rise to questions over what information can be harnessed to train the algorithm, or how the bots use data from copyright-protected sources in answering user questions. “In China, the final boundaries of law may not be set yet,” says Ke.

And Shen Meng, managing director at Beijing-based boutique investment bank Chanson & Co., cautions that the ChatGPT-style projects probably won’ t translate into revenue gains any time soon. “The Chinese internet companies are only following after others do it first and became a sensation,” he says. “But AI is a key technology that requires long-term investment… and this underlying technology won’t bring material changes to business performance very quickly.”

Investors in mainland China, however, are undaunted and continue to chase shares of several AI-related companies including billionaire Zhou Hongyi’s Shanghai-listed 360 Security Technology, which has been soaring to its daily trading limit of 10% after announcing earlier this week that it’s also working on a ChatGPT-style bot.

International investors, on the other hand, seem to be dialing back their expectations. Baidu’s shares dropped as much as 6.3% in Hong Kong on Thursday, extending yesterday’s almost 5% decline as the initial rally over its chatbot project seems to be losing momentum.

The fall may in part be due to Google’s glitch. In its apparent haste to defend its search dominance, the U.S. tech giant inadvertently highlighted the difficulties of putting chatbot technologies to real-world use when its Bard bot provided inaccurate information when answering questions during a demo video. The mistake caused parent company Alphabet’s share price to drop 7%, which wiped out a whopping $100 billion from its market value.

And at least one Chinese company is already acknowledging the challenges that lie ahead. In a response to an investor query, 360 Security Technology said there is a “major gap” between its investment and tech prowess when compared with the latest version of ChatGPT. Its bot, for now, is only intended as an internal tool. The company emphasized in a separate stock exchange filing that its technology is a generation behind ChatGPT, and there are “major uncertainties” in its actual use.