ByteDance, Alibaba and Tencent are spending $647 million on AI. Or rather: in Christmas bribes by AI

The big three Chinese tech companies have decided that the best way to get users for their AI chatbots is to literally pay them to use them. Between them, they are investing more than $2.9 billion in incentives during the Lunar New Year, the biggest Chinese holiday. It is a war with a single intention: to be the gateway for AI in the country.

Subsidy war. The Chinese Lunar New Year has become another major battleground to win the AI ​​race. As they say from the LatePost newsletter (translated by Recode China AI), Alibaba leads with 3,000 million yuan (about 431 million dollars) that it will distribute to its users for its app qwenfollowed by Tencent with 1 billion yuan to yuanbaoand Baidu with 500 million. ByteDance, for its part, has secured the most expensive sponsorship of the Spring Festival Gala to promote Doubaoits chatbot that already has 100 million daily active users.

User acquisition. Companies are using money in different ways but with the same objective: hooking users. Alibaba is subsidizing real purchases, from milk tea to hotel reservations, all through its Qwen assistant. According to Bloombergsome stores that offered milk tea have been overwhelmed by orders that had been placed through the chatbot. Tencent offers digital envelopes of up to 10,000 yuan (1,219 euros) directly in cash. On the other hand, ByteDance has taken advantage of its muscle in social networks to integrate Doubao throughout its network of applications.

Between the lines. The most interesting part of all this is that it seems that none of these companies yet know how to monetize their AI tools, according to industry sources cited by LatePost. “Monetization models for Chinese AI companies remain murky, a challenge that is also reflected in the United States,” points out Shi Jialong, analyst at Nomura. They are buying users in the hopes of later figuring out how to convert them into revenue.

Competence. The situation is radically different from that of a year ago. DeepSeek changed the rules of the game your R1 model last year, gaining 10 million active users in less than a month. And just as they mention in LatePost, that set off a chain reaction, causing Tencent to dive headlong into AI after years of caution, Alibaba to prioritize its Qwen app above everything (even its Quark browser), and ByteDance to accelerate its investment in talent and infrastructure.

Yields. ByteDance reported net profits of about $40 billion in the first three quarters of the year, while Tencent reached $30 billion and Alibaba about $10 billion. according to LatePost. Despite having achieved lower profitability in its operations, Alibaba intends to increase its investment in AI infrastructure, specifically from 55 billion to 69 billion dollars in the next three years, as pointed out in the newsletter. ByteDance, for its part, was processing an average of 63 billion tokens daily with its AI models at the end of 2025, a growth of 200% in six months.

And now what. The subsidy war to be the gateway to China is not new. As well as remember In Bloomberg, in sectors such as shared transportation or food delivery, they have experienced this battle of companies throwing incentives at their users. And companies lose money massively until the market consolidates. The difference is that here users are not afraid to change AI models and quickly switch to the one that offers the best technical performance, as indicated the OpenRouter report. It will be interesting to see what the market share of the main AI models in China looks like when they stop flying the envelope.

Cover image | Arthur Wang and Solen Feyissa

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ByteDance, Alibaba and Tencent are spending $647 million on AI. Or rather: in Christmas bribes by AI

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Xataka

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Antonio Vallejo

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