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DeepSeek demand shrinking: Baidu founder notes shift away from text-only AI

Baidu Co-founder Robin Li said the demand for text-only generative AI models — such as those developed by industry frontrunner DeepSeek — is 'shrinking', in a direct swipe at one of China's most high-profile AI companies. Speaking at Baidu's developer conference on Friday, as reported by the Financial Times, Li claimed that while DeepSeek's large language models had gained early traction, they were now limited by their text-only capabilities. He criticised the models for a higher rate of so-called 'hallucinations', as well as slower performance and greater cost compared to rival domestic offerings. DeepSeek rapid rise in AI ecosystem DeepSeek had rapidly risen to prominence in China's artificial intelligence (AI) ecosystem. The company surged ahead in January with the release of its R1 model, widely seen as a significant leap in reasoning capabilities, and has since become the dominant player in the country's large language model (LLM) space. Competition heats up among AI firms While Baidu was the first to respond to the release of OpenAI's ChatGPT in 2022 with its Erniebot, DeepSeek and others have since entered the competitive landscape. Baidu was ultimately forced to open-source its models after subscription uptake fell flat, amid a wave of free alternatives. In response to DeepSeek's dominance, rivals have been racing to catch up. Baidu's newly launched Ernie 4.5 Turbo and X1 Turbo feature multimodal capabilities — spanning text, image, audio and video — in a bid to outpace DeepSeek's more narrowly focused approach. Alibaba has also made aggressive moves in the space, releasing its open-source QwQ model, which it claims matches DeepSeek's performance with far less training data. Baidu has integrated DeepSeek's models into several of its own platforms, including its enterprise Qianfan offering and its search and map products — underlining the influence DeepSeek continues to hold across the AI landscape. Other tech giants have also scrambled to enter the fray. ByteDance's Doubao chatbot and Tencent's Yuanbao AI assistant have both challenged Baidu's earlier momentum, while Alibaba's Qwen platform has emerged as a key rival in both capability and scale. DeepSeek, meanwhile, remains focused on future development, with its R2 and V4 models in the pipeline. Baidu's latest models could speed up AI-adoption According to the report by Financial Times, Baidu's latest moves could help speed up the adoption of AI technologies across industries, lower entry barriers for developers, and further fuel the growing competition among China's leading cloud and AI providers.