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Chinese technology companies such as Tencent, Alibaba and ByteDance aim to hit the market with new large-language models (LLMs) and cut fees for application programming interface (API) access to these models, a move that industry insiders said is primarily of interest to business users, although it also serves as a bellwether for future consumer options.

The explosion of LLMs has led tech giants to race toward innovation, releasing successive iterations of LLMs amid a new wave of fee cuts.

On Wednesday, AI start-up iFlytek announced its Spark LiteLLMAPI will be permanently opened for free use and fees for its top-of-the-line model were significantly reduced. 

The fee, which is one-fifth of the cost of similar products, from competitors, will make it accessible to more users and developers. It may also accelerate the commercialization of LLM technology, the company said in a note sent to the Global Times.

In recent days, tech giants such as Alibaba, Baidu and ByteDance cut the costs of their LLMs. On Tuesday, Alibaba Cloud said it had cut service prices for its LLM TongyiQianwen by up to 97 percent to 0.0005 yuan ($0.0001) per 1,000 input tokens, effective as of Wednesday. 

In AI, a token is a fundamental unit of data that is processed by algorithms, with 1,000 tokens roughly equivalent to 750 English words. Chinese search engine Baidu has made its ENIRE Speed and ENIRE Lite models free of charge as well.

These sharp fee cuts are expected to speed up the exponential growth of AI applications, Liu Weiguang, president of public cloud business at Alibaba Cloud Intelligence, told the Xinhua News Agency on Tuesday.

Such cuts are common for foreign LLM applications. Since the start of 2023, US AI start-up OpenAI has reduced fees four times.

With fee cuts by domestic LLM producers including iFlytek, Baidu, Alibaba and ByteDance, the Chinese AI models are entering a new stage of competition, business insiders noted. More affordable LLMs will promote innovation in various application scenarios and increase demand, they said.

"A price war for AI models has just begun," Tian Feng, dean of the SenseTime Intelligence Industry Research Institute, told the Global Times on Wednesday.

Experts emphasized the importance of innovation and upgrading of AI technology to promote application scenarios. According to an industry report, China's AI market will reach $26.44 billion in 2026.

Price wars are a normal business trend driven by market competition, and they don't fundamentally change the process of scientific research and industrial innovation, Tian said.

What's more important is how Chinese companies come out with innovative AI models and accelerate the catch-up process with foreign rivals. 

The market and consumers always want the most advanced LLMs, so LLM producers need to reduce user fees through ongoing research and development, Tian said.