Baidu Inc. has announced that its Ernie AI chatbot will now be free for individual users. This decision, revealed through a WeChat post last Thursday, sent Baidu’s stock soaring by over 12% in Hong Kong, marking its largest single-day climb since October.

The tech giant, a leader in China’s search engine market, has struggled to match the user base of competitors like ByteDance’s Doubao and the newcomer DeepSeek.

By making Ernie accessible without charge from April, Baidu aims to enhance its market presence.

This strategy shift comes as Baidu continues to charge enterprise clients for AI access via cloud services, maintaining a revenue stream despite the new free user policy.

The latest version of Ernie, dubbed Ernie 4.0, is said to rival OpenAI’s GPT-4 in capabilities, a significant upgrade that Baidu hopes will attract more users.

In addition to the free chatbot service, Baidu introduced a new search function with advanced reasoning capabilities, also available at no cost starting April 1.

While Baidu’s initiative could pressure other AI firms to adjust their pricing strategies, it also positions the company to potentially lead in technology adoption and innovation in a market that has seen aggressive moves from both established players and startups.

DeepSeek and Alibaba have also been key players, with AI offerings that challenge traditional cost structures and performance benchmarks.

The competition in China’s AI sector shows no signs of slowing down, with companies continually seeking ways to outpace one another.

Baidu’s latest updates to its offerings and pricing model could be a game-changer, signaling a new phase of competition among tech giants in the region.