Chinese tech giant Baidu Inc. has introduced a new AI model, Ernie X1, capable of explaining its reasoning. To strengthen its market position amid increasing competition—particularly from DeepSeek—the company also announced an upgrade to its base AI model, Ernie 4.5, which Baidu claims surpasses GPT-4.5. In addition, Baidu has made all tiers of its AI chatbot service, including X1, free for users several weeks ahead of schedule. The company further revealed that its Ernie AI models will be open-sourced starting June 30, 2025.
Ernie X1 is designed to handle everyday conversations, conduct complex calculations, and reason logically. This functionality closely mirrors what DeepSeek demonstrated earlier with its R1 model, which disrupted the global AI industry by offering top-tier chatbot performance at a significantly lower development cost. The launch of Ernie X1 is widely viewed as Baidu’s strategic response to the intensifying competition in the generative AI market.
Ernie 4.5 and Open-Source Transition
Alongside Ernie X1, Baidu unveiled its updated AI model, Ernie 4.5. According to the developers, this version outperforms OpenAI’s GPT-4.5 in various industry tests, especially in text generation tasks. However, the specific metrics and comparison methodologies have not been disclosed.
A major strategic shift announced by Baidu is the transition to an open-source model for its Ernie AI, effective from June 30, 2025. This move appears to be a direct response to DeepSeek’s growing popularity, whose open-source models have gained significant traction among developers worldwide. By opening its source code, Baidu aims to attract more specialists, enhance its technological capabilities, and bolster its influence in the global AI arena. We’ll keep you updated as Baidu progresses with this initiative.
Business Moves and Market Dynamics
In a noteworthy move, Baidu integrated the rival DeepSeek R1 model into its search engine, which remains a core component of its business operations. This integration is intended to improve search accuracy and enhance the quality of AI-generated responses.
Financially, Baidu reported a 26% increase in revenue from cloud services in Q4 2024, driven by the growing demand for computing power required for AI applications. However, this positive development was partially offset by weaker advertising sales due to the prevailing economic situation in China, notes NIX Solutions.
Additionally, in February, Baidu finalized the acquisition of the YY Live streaming platform from Joyy Inc. The deal, valued at $2.1 billion (with $1.6 billion held in escrow), frees up significant funds that can now be redirected towards advancing Baidu’s AI and cloud technologies.