![\"Customers](\"https:\/\/www.europesays.com\/ai\/wp-content\/uploads\/2026\/08\/a57482f9-6b7a-4db0-a86f-6c468101f81c-AI-AGI-bar-AFP-10082026-.webp\"\/)
Customers work at AGI Bar in Beijing\u2019s Zhongguancun district, which opened last summer as a hub for AI developers, founders and investors. (AFP pic)
\nBEIJING: Artificial intelligence users are shopping around as US giants face fierce competition from Chinese rivals \u2014 and in Beijing\u2019s tech district, drinkers at an AI-themed bar can even plug in to DeepSeek for free.<\/p>\n
A new generation of cost-efficient, high-performance Chinese AI is putting pressure on Silicon Valley\u2019s leading labs to lower prices to grab market share as they try and find ways to turn a profit.<\/p>\n
ChatGPT maker OpenAI\u00a0has slashed fees by 80% for its latest lightweight model \u201cLuna\u201d, and Anthropic has unveiled a model approaching its most powerful system\u2019s performance at half the price.<\/p>\n
Meanwhile some of China\u2019s buzziest AI companies are raising fees as their open-source offerings gain traction among businesses and programmers worldwide.<\/p>\n
DeepSeek\u00a0\u2014 whose V4 Flash tops the usage leaderboard of technical platform OpenRouter \u2014 said last week it plans a \u201csignificant increase\u201d in prices for programmers.<\/p>\n
Thirsty Beijingers have another option: free AI for customers at AGI Bar, which opened last summer as a hub for developers, founders and investors.<\/p>\n
The bar is decorated with references to China\u2019s AI boom, with logos of the country\u2019s major labs on the walls and the menu full of jokes riffing on tech jargon.<\/p>\n
Its signature drink AGI \u2014 \u201cArtificial General Intelligence\u201d, meaning future AI tools as clever as humans \u2014 is a glass almost entirely full of beer foam, a nod to the frothy hype rife in the industry.<\/p>\n
\u201cIt\u2019s quite common for bars to provide free Wi-Fi with routers, so I\u2019ll provide free tokens,\u201d or units of AI usage, bar owner Song De told AFP.<\/p>\n
\u2013 Challengers \u2013<\/p>\n
The bar in Zhongguancun, often called China\u2019s Silicon Valley, has two boxy Nvidia workstations to self-host DeepSeek V4 Flash \u2014 meaning Song doesn\u2019t need to pay the Chinese startup to use its model.<\/p>\n
Large language models are the technology that underpins chatbots and other AI tools by crunching vast amounts of digital data.<\/p>\n
Song, an independent AI developer himself, is one of many swapping the most cutting-edge, bells-and-whistles \u2014 and expensive \u2014 models, like Anthropic\u2019s Fable 5, for leaner alternatives like V4 Flash.<\/p>\n
These are much cheaper to run and good enough for many purposes, such as helping run AI agents that can carry out real-world tasks autonomously, experts say.<\/p>\n
\u201cThere\u2019s a lot of stuff that can be done with older models, or lesser models, or small language models,\u201d said technology analyst Jack Gold, founder of J.Gold Associates.<\/p>\n
\u201cEspecially as we move into the agentic world, a lot of the models will be running locally.\u201d<\/p>\n
New Chinese AI models big and small \u2014 from Moonshot AI\u2019s Kimi K3 to Alibaba\u2019s popular Qwen series \u2014 are grabbing attention as challengers to Anthropic and OpenAI\u2019s lead.<\/p>\n
Both US companies are preparing to go public, which means they \u201cneed to start showing a profit\u201d, Gold told AFP.<\/p>\n
\u201cI hesitate to say it\u2019s a price war because we\u2019re not quite there yet. But it\u2019s certainly a price competition to try and get more users on board,\u201d Gold said.<\/p>\n
\u201cAlso there\u2019s a lot of pressure from enterprises to say: agents are great, AI is great, but I can\u2019t be spending twice the annual salary for (a given employee) on AI.\u201d<\/p>\n
\u2013 \u2018The cheaper, the better\u2019 \u2013<\/p>\n
Chinese AI models are often open-source, meaning they can be modified by programmers \u2014 unlike top US options, where the underlying code and data is locked away.<\/p>\n
\u201cOpen-source is closing the performance gap with closed models faster than anyone expected,\u201d said Wang Tiezhen, an independent AI consultant and former head of APAC ecosystem at developer platform HuggingFace.<\/p>\n
\u201cLast year\u2019s frontier is quickly becoming today\u2019s commodity,\u201d he told AFP.<\/p>\n
Smaller US players are also fuelling competition in the fast-evolving sector.<\/p>\n
Elon Musk\u2019s xAI has slashed the price of some Grok models, while Meta just released a low-cost option called Muse Spark 1.2.<\/p>\n
Leo Feng, founder of Chinese agent operating system Cola.APP, said price cuts are \u201can inevitable trend\u201d that \u201cmay lead to a boom in downstream applications\u201d.<\/p>\n
And Max Liu of LobeHub, another agent system, sees international AI price competition as \u201ca good thing for the world as a whole\u201d.<\/p>\n
\u201cThe cheaper AI is, the better,\u201d Liu said.<\/p>\n
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