As we step into the year 2025, the landscape of artificial intelligence (AI) development is undeniably at a critical junctureThis moment marks a transformative turning point where DeepSeek has emerged as a pivotal force, igniting a wave of change that accelerates both the differentiation and evolution of former industry titansLeading the charge, the trio known as BAT—Baidu, Alibaba, and Tencent—find themselves either making adaptations or navigating their positions in this burgeoning arena.

Recent announcements from these internet giants reveal their strategies to integrate DeepSeek into their core products, capturing the immediate attention of capital marketsStock prices of various Chinese internet companies began to soar, reflecting optimistic market expectations and a noticeable trend of asset repricingHowever, within this week alone, from February 14 to February 20, stock performances diverged significantlyFor instance, Baidu's shares dropped by 11.44%, while Alibaba's stock rose by 3.60% and Tencent's surged by 10.14%, illustrating a dichotomy in fortunes among these three key players.

This contrast in stock performance signals the prelude to what promises to be a profound industry changeThe outcomes ahead hinge not only on the decisions made by these powerful companies but also on how they navigate the turbulent waters of this rapid transformation.

Behind the strategic fragmentation lies the critical ability to create closed-loop ecosystems, which may become a determining factor in the impending duels for market supremacyHistorically, players in the AI space, ranging from the so-called "AI six dragons" to these internet behemoths, centered their strategies on model capabilitiesHowever, with DeepSeek's advent, the paradigm has shiftedThe ability to supply vast resources and excelling in engineering becomes indispensable for building a successful AI ecosystem.

In the face of egalitarian trends in large model technology, Tencent, Alibaba, and Baidu have opted for starkly different strategic pathways, which have directly influenced their market performance and trajectories.

Tencent is pursuing what can be described as an "AI parasitic evolution" within its social ecosystem

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Recently, the company introduced a fully functional version of the DeepSeekR1 model into WeChat's search feature, marking Tencent as the first major internet company to integrate this model into its primary businessWith a staggering 1.38 billion monthly active users generating an average of 600 million searches daily, WeChat's search capabilities have drastically improved, leveraging AI to provide personalized responses based on user chat histories and official account content.

This integration is expected to expand further, with plans to incorporate the DeepSeekR1 model across various Tencent products, creating a robust AI matrix that intertwines search, content, and toolsTencent's approach illustrates a transition from being a follower in large model development to a proactive ecosystem integrator, demonstrating a shift documented by Ma Huateng's "light bulb theory." This philosophy advocates prioritizing adaptation in core scenarios over being the first to release self-developed models.

For Tencent, this evolution offers a significant opportunity to reshape traditional search paradigms, providing users with a more nuanced understanding of WeChat's search functionalities.

On the other hand, Alibaba has positioned itself as one of the principal beneficiaries of DeepSeek's rise to prominenceBy partnering with Apple and integrating DeepSeek, Alibaba has recalibrated its public perception, spotlighting its investments and achievements within AIChanging its focus from new retail to AI-driven solutions, Alibaba has adopted a dual-strategy approach, enhancing both its technical infrastructure and its consumer offerings.

Owing to the rapid expansion of its "Tongyi Qianwen" open-source model, which has produced over 90,000 derivative models, Alibaba has ensured that its cloud platform allows for seamless deployment of DeepSeekThis in turn provides tailored development services for businesses and developers alikeNotably, collaborations with Apple have enabled Alibaba to tap into the global iPhone user base, extending its reach beyond the traditional voracious appetite for e-commerce.

In contrast to Tencent’s stealthy integration, Alibaba is taking a more aggressive stance in deploying AI across business-to-business (B2B) and business-to-consumer (B2C) landscapes, further evolving its identity from an e-commerce platform to a "digital infrastructure contractor."

Baidu's venture into integrating DeepSeek, however, seems propelled more by necessity than innovation

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With the meteoric rise of ByteDance, Baidu has found itself at a disadvantage in direct confrontations with the newcomerOnce a front-runner in adopting trends from OpenAI, Baidu has struggled to maintain relevance, as evidenced by its January 2025 metrics indicating 13.05 million monthly active users for its Wenxinyiyan product, contrasting starkly with Doubao's 78.61 million.

The emergence of DeepSeek fundamentally challenged Baidu's previously held belief in the supremacy of closed-source models over open-source paradigmsThe company was tardy in capitalizing on the developer ecosystem, consequently prompting an announcement regarding the upcoming open-source release of its Wenxin model series 4.5. As Baidu's grip on various core areas wavers, the pressure to adapt mounts, catalyzing its decision to adopt an open-source model following the comparable moves made by WeChat.

The stock market's immediate responses have illustrated the burgeoning AI wave, while companies possessing both entrance traffic and application ecosystems scramble to establish a competitive edge in this evolving landscapeThe looming prospect of a “century warfare” in AI promises a thrilling climax to the ongoing drama.

Amid this turbulence, Baidu’s recent quarterly reports have significantly influenced its stock performanceWhile it reported a slight revenue decline—down to 34.12 billion RMB (approx. $4.68 billion)—the numbers still managed to outperform Wall Street's estimatesHowever, its core online marketing revenue, generating 17.9 billion RMB, displayed a worrying 7% year-over-year decline, indicating the brand's ongoing struggles in the digital advertising sector.

As short video platforms capture a larger share of the advertising budget, Baidu's challenge to attract new market growth has considerably intensifiedNevertheless, the company has experienced a silver lining; its artificial intelligence cloud revenue surged to 7.1 billion RMB in the fourth quarter, marking an impressive 26% annual growth.

Moreover, Baidu's artificial intelligence services saw exponential growth, with API calls skyrocketing from 50 million to 1.65 billion daily within a year

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This broadened visibility implies recognition from the market regarding the relevance of Baidu's AI capabilities, with CEO Robin Li voicing optimism that 2024 will be pivotal for the firm’s transformation from a primarily internet-centric business to one where artificial intelligence takes priority.

Looking ahead, the anticipated open-source ecosystem has the potential to spotlight Wenxinyiyan’s true value, broadening its application scope and amplifying its market impactNevertheless, for Baidu, the ongoing decline in advertising revenue at odds with the rising fortunes of their AI cloud services indicates a transitional downturn.

As the industry undergoes a reshuffling, the time has come for Baidu to embark on a technological counteroffensiveWith the right blend of strategic positioning, technological advancement, and an eye towards market agility, there is hope on the horizonBaidu’s advancements in AI applications are beginning to bear fruit, and the lasting effects of these initiatives are yet to be seen.

DeepSeek’s ascendance has positioned it among the elite in global AI, intensifying competition among AI vendorsBaidu’s impending open-source strategy with Wenxin 4.5 may serve to hasten demand for API calls and localized implementations, creating fertile ground for a resurgence within the developer ecosystem.

Furthermore, Baidu is progressing in vertical applications, with its AI-driven solutions experiencing substantial growthIts paid user base for Baidu Wenku surged by 60%, while monthly active users surpassed 90 millionIntegrating distinct features such as smart PPT and free canvas has carved out niches within education and corporate domains, further consolidating Baidu's competitive edge.

In the autonomous driving sector, Baidu has evolved its capabilities since 2013, investing over 150 billion yuan and accumulating more than one billion kilometers of high-level autonomous driving test miles, alongside thousands of patents in this field

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