The Chinese AI market is a 2-player game
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The Chinese AI market is a 2-player game

The Chinese Artificial Intelligence (AI) market is dominated by two big players: Baidu and Tencent. And these two companies are working hard to outcompete each other. Tencent is using its massively popular messaging app, WeChat, into a multi-purpose platform that offers everything from video games to food ordering to online payments. As a result, China’s search engine market leader, Baidu, has added similar services to its mobile app.

Chinese AI this year: Tencent, up 19%; Baidu up 6%

chinese ai

SOURCE: Yahoo Finance

The next step in this rivalry is the application of AI to Tencent and Baidu’s platforms. The benefits this could bring to these platforms is immense, boosting their analytic capabilities and setting powerful informational infrastructure in place that can act as foundations for their coming initiatives: self-driving cars, connected homes, and whatever else is in the pipeline.

Tencent claims that it has already applied AI to “over a hundred” of its products, the most notable being WeChat. Its goal is to continue adding AI across its whole range of products in four key areas: content, social apps, online games, and cloud services.

The company may not be a search engine, but in other ways, it is comparable to Google. For one thing, it has followed its American counterpart’s lead by developing its own Go-playing artificial intelligence (‘Fine Art’). Why Go? Because researchers think that the kind of complex, open-ended, strategic problems the game presents are uniquely useful in measuring what we generally think of as ‘intelligence’ – novel, human-like, problem-solving abilities that involve learning. Tencent is also similar to Google in its belief that AI, ride hailing apps, electric vehicles and automated vehicles are destined to converge.  

The obvious comparison with Google, though, is Baidu. Like the former company, Baidu is most famously a search engine, but has its hand in other industries too. Baidu started its Big Data Lab in July 2014, with a focus is on machine learning and big data, and its products include digital assistant Duer and predictive analytics tools for businesses.  

But Baidu is pushing further into the AI industry by obtaining approval from the Chinese government to launch a state-backed engineering laboratory to investigate deep learning technology: computer vision, machine hearing, biometric identification, and human-computer interactions. Add that to its acquisition of Raven Tech, an AI platform-for-smart homes developer, and the company’s offerings look set to increase at a dramatic pace.

Leo Sun, writing at The Motley Fool about the company’s position as rivals, says: “I doubt that either company will completely outmaneuver the other. That’s because the battle between Tencent and Baidu closely mirrors the ongoing clash between Facebook and Google – one company owns the dominant social network, while the other controls the dominant search engine.”

For now, then, the expanding Chinese AI market is a two-horse race.

Disclosure

Dominion holds both Tencent and Baidu in its Global Trends Ecommerce Fund.


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