Chinese AI firms looking for new clients amid OpenAI API restrictions

Artificial intelligence (AI) companies based in China are eyeing OpenAI users as the U.S.-based company plans to roll out application programming interface (API) restrictions in mainland China and other jurisdictions.

Reuters reported that OpenAI will limit access to its AI chatbots to Chinese entities starting July 9 to prevent entities from accessing a back door to its services. Since 2022, Chinese authorities have restricted OpenAI’s ChatGPT for individuals citing non-compliance with national ideals, but developers can integrate it into their own products.

“We are taking additional steps to block API traffic from regions where we do not support access to OpenAI’s services,” said a company spokesperson.

As the deadline looms, developers using OpenAI’s API have begun shopping for alternatives including options from Google (NASDAQ: GOOGL) and Meta (NASDAQ: META).

However, local technology firms are relishing the opportunity to convert new users to their platforms by offering various incentives. Firms like Alibaba Cloud plan to offer AI developers free tokens and a seamless migration to its own Qwen-plus model, sweetening the deal with cheaper subscriptions.

Industry leader Baidu is offering to match OpenAI via additional tokens for its Ernie model and an inclusive onboarding program from developers. Baidu’s Ernie chatbot has seen industry-wide application since mid-2023, rising to the top of the rankings for commercial AI models within weeks of its release.

Zhipu AI joined the fray by rolling out a “Special Migration Program” for incoming developers who rely on OpenAI’s API to bring them up to speed. According to a company statement, Zhipu AI is banking on its compatibility with OpenAI and advanced security features to lure new users to the platform.

“Our GLM model fully benchmarks against OpenAI’s product ecosystem,” said Zhipu AI. “With our entirely self-developed technology, we ensure security and controllability.”

China is pitching its tent with local AI models while reducing reliance on Western products for hardware and software. Recent trade restrictions from the U.S. have stiffened the government’s resolve to look inwards, developing its own chips and promoting localized large language models (LLMs).

Massive industrial applications

After a near-botched attempt to incorporate blockchain and digital assets, China appears to be doubling down efforts to get it right with AI.

In the months following the release of a regulatory framework, there has been a noticeable spike in AI use cases across several industries. One report highlights use cases in health, robotics, education, meteorology, and biopharmaceuticals, but a glaring absence in finance raises eyebrows.

The country has extended its AI initiative to military applications in partnership with Russia and its allies while sinking funds to deepen the local talent pool to support its ambitions.

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