Is China quietly profitable the AI race?

Each month, lots of of hundreds of thousands of customers flock to Pinterest in search of the newest kinds.

One web page titled “probably the most ridiculous issues” is full of loads of wacky concepts to encourage creatives. Crocs repurposed as flower pots. Cheeseburger-shaped eyeshadow. A gingerbread home product of greens.

However what would-be consumers might not know is the tech behind this is not essentially US-made. Pinterest is experimenting with Chinese language AI fashions to hone its advice engine.

“We have successfully made Pinterest an AI-powered purchasing assistant,” the agency’s boss Invoice Prepared instructed me.

After all, the San Francisco-based tastemaker may use any variety of American AI labs to energy issues behind-the-scenes.

However for the reason that launch of China’s DeepSeek R-1 mannequin in January 2025, Chinese language AI tech has more and more been part of Pinterest.

Prepared calls the so-called “DeepSeek second” a breakthrough.

“They selected to open supply it, and that sparked a wave of open supply fashions,” he stated.

Chinese language opponents embody Alibaba’s Qwen and Moonshot’s Kimi, whereas TikTok proprietor ByteDance can also be engaged on related know-how.

Pinterest Chief Expertise Officer Matt Madrigal stated the power of those fashions is that they are often freely downloaded and customised by firms like his – which isn’t the case with nearly all of fashions supplied by US rivals like OpenAI, which makes ChatGPT.

“Open supply strategies that we use to coach our personal in-house fashions are 30% extra correct than the main off-the-shelf fashions,” Madrigal stated.

And people improved suggestions come at a a lot decrease value, he stated, generally ninety % lower than utilizing the proprietary fashions favoured by US AI builders.

Pinterest is hardly the one US enterprise relying on AI tech from China.

These fashions are gaining traction throughout an array of Fortune 500 firms.

Airbnb boss Brian Chesky instructed Bloomberg in October his firm relied “lots” on Alibaba’s Qwen to energy its AI customer support agent.

He gave three easy causes – it is “superb”, “quick” and “low-cost”.

Additional proof could be discovered on Hugging Face, the place individuals go to obtain ready-made AI fashions – together with from main builders Meta and Alibaba.

Jeff Boudier, who builds merchandise on the platform, stated it’s the value issue that leads younger start-ups to take a look at Chinese language fashions over their US counterparts.

“If you happen to take a look at the highest trending fashions on Hugging Face – those which can be most downloaded and appreciated by the group – usually, Chinese language fashions from Chinese language labs occupy lots of the prime 10 spots,” he instructed me.

“There are weeks the place 4 out of 5 prime coaching fashions on Hugging Face are from Chinese language labs.”

In September, Qwen topped Meta’s Llama to turn out to be probably the most downloaded household of huge language fashions on the Hugging Face platform.

Meta launched its open-source Llama AI fashions in 2023. Up till the discharge of DeepSeek and Alibaba’s fashions, they had been thought of the go-to alternative for builders engaged on bespoke purposes.

However the launch of Llama 4 final yr left builders underwhelmed, and Meta has reportedly been utilizing open-source fashions with Alibaba, Google, and OpenAI to coach a brand new mannequin set for launch this spring.

Airbnb additionally makes use of a number of fashions, together with US-based ones, internet hosting them securely within the firm’s personal infrastructure. The information is rarely offered to the builders of the AI fashions they use, in accordance with the corporate.

Going into 2025, the consensus was regardless of billions of {dollars} being spent by US tech corporations, Chinese language firms had been threatening to tug forward.

“That is not the story anymore,” Boudier stated. “Now, the very best mannequin is an open-source mannequin.”

A report printed final month by Stanford College discovered Chinese language AI fashions “appear to have caught up and even pulled forward” of their world counterparts – each by way of what they’re able to, and the way many individuals are utilizing them.

In a latest interview with the BBC, former UK deputy prime minister Sir Nick Clegg stated he felt US corporations had been overly targeted on the pursuit of AI which can in the future surpass human intelligence.

Final yr, Sir Nick left his publish as head of world affairs at Meta, the developer of Llama. Boss Mark Zuckerberg has dedicated billions of {dollars} to attaining what he calls “superintelligence.”

Some consultants at the moment are calling these ambitions imprecise and ill-defined – giving China a gap to dominate the open-source AI house.

“Here is the irony,” Sir Nick stated. Within the battle between “the world’s nice autocracy” and “the world’s biggest democracy” – China and America – China is “doing extra to democratise the know-how they’re competing over”.

The Stanford report additionally prompt China’s success in growing open-source fashions may very well be partly defined by authorities help.

On the opposite facet of the world, US firms like OpenAI are beneath intense strain to extend income and turn out to be worthwhile – and is now turning to adverts to assist get there.

The corporate launched two open-source fashions final summer season – its first in years. Nevertheless it has poured most of its sources into proprietary fashions to assist it earn a living.

OpenAI boss Sam Altman instructed me in October it has invested aggressively into securing ever extra computing energy and infrastructure offers with companions.

“Income will develop tremendous quick, however it’s best to count on us to take a position a ton in coaching, within the subsequent mannequin and the subsequent and the subsequent and the subsequent,” he stated.