Chinese AI companies, from major players like Baidu to smaller firms like Manus AI, are increasingly adopting open-source licensing for their projects, CNBC reports. This shift marks a departure from proprietary business models as firms seek faster innovation and broader adoption.
The open-source trend gained momentum after DeepSeek, a Chinese startup, released its R1 reasoning model earlier this year. This move challenged American dominance in AI, impacting tech stocks and raising questions about the high costs of large language model development. DeepSeek’s success demonstrated that achieving competitive results doesn’t require massive investments.
Market Impact and Industry Response
Analysts highlight that DeepSeek’s success has accelerated the push toward open-source AI. “DeepSeek’s success proves that open-source strategies can lead to faster innovation and wider adoption,” said Wei Sun of Counterpoint Research. Many organizations have since integrated DeepSeek’s model into their work.
On March 16, Baidu released an updated version of its Ernie 4.5 base AI model and introduced a new reasoning model, Ernie X1, making them free for individual users. The company also announced plans to open-source several Ernie 4.5 models by late June. Experts view Baidu’s decision as a significant shift in China’s AI market, which has traditionally relied on proprietary software licensing.
Lian Jye Su, principal analyst at Omdia, noted that Baidu had previously resisted open-source strategies, but DeepSeek’s competitive performance demonstrated that open-source models could be just as robust as proprietary ones.
DeepSeek R1 operates under the MIT license, one of the most widely used open-source licenses, allowing unrestricted modification and distribution, including for commercial purposes. While DeepSeek’s AI model is free, the company monetizes access through an API that enables integration into external applications. Its pricing is considered more affordable than offerings from OpenAI and Anthropic, which keep their datasets and algorithms private.
Broader Industry Adoption
Other Chinese tech giants are following suit. Alibaba Cloud recently announced the open-sourcing of its video-generating AI models, while Tencent unveiled five new open-source AI models in early March, capable of transforming text and images into 3D visualizations.
Smaller AI firms are also embracing the trend, notes NIXSolutions. Manus AI, which claims its AI agent outperforms OpenAI’s Deep Research, announced plans to go open-source. Zhipu AI, a leading Chinese AI startup, declared 2025 as the “year of open source” on WeChat.
Ray Wang, chief analyst at Constellation Research, explained that DeepSeek’s move forced competitors to adapt. “Because DeepSeek is free, no other Chinese competitors will be able to charge for the same thing. To compete, they will have to move to open-source business models,” he said.
Tim Wang, managing partner at Monolith Management, compared the shift to an “Android moment.” Just as Google’s open-source operating system fueled innovation beyond Apple’s ecosystem, China’s AI sector is seeing a similar transformation.
As more Chinese AI firms embrace open-source strategies, the industry is poised for rapid change. Yet we’ll keep you updated as more developments unfold.