Chinese AI giant Baidu experienced a significant drop in its stock value following a misleading report published by the South China Morning Post. The article, which cited an obscure research paper linked to the Chinese military, falsely claimed that Baidu was collaborating with the military. However, it was later clarified that the researchers had only used Baidu’s language model, Ernie Bot, in the same manner as any public user. Baidu, in a statement, denied any business collaboration with the authors of the paper or affiliated institutions.
Despite the correction, Baidu suffered an estimated loss of $4.68 billion in market capitalization on the Hong Kong Stock Exchange. Concerns arose that Baidu could face US sanctions similar to those imposed on Chinese telecommunications giant Huawei. Baidu’s primary listing is on the NASDAQ stock exchange.
This incident highlights the challenges faced by tech companies in maintaining distance from their national militaries while developing and deploying dual-use technologies like generative AI. In the past, Google faced backlash for its involvement in Project Maven, a program focused on developing computer vision for military drones. Although Google ended its participation due to public pressure, it has continued to cooperate with the military and intelligence establishment. OpenAI also recently amended its usage policies, removing “military and warfare” from its list of prohibited uses.
While US companies have the option to withhold proprietary technology from the government, the situation is less clear in China. Chinese companies, particularly those listed on US stock exchanges, face vulnerability to US sanctions due to difficulties in convincing the US that they can refuse to cooperate with the Chinese military. However, a report by the Center for a New American Security clarified that there is no explicit legal obligation for Chinese companies to participate in the military-civilian fusion policy.
It is important to note that Baidu, primarily known for its search engine, is not comparable to Huawei. The South China Morning Post article, published on January 12, falsely alleged a physical connection between a Chinese military lab’s AI system and Baidu’s Ernie Bot. The newspaper later corrected the report, acknowledging the absence of a dedicated line between the two. Pekinology, an independent newsletter focusing on US-China relations, further debunked the newspaper report, highlighting misrepresentations of the Chinese paper’s content and implications.
In conclusion, the misleading report on Baidu’s collaboration with the Chinese military caused a significant decline in the company’s stock value. Baidu has denied any involvement with the military, emphasizing that its use of Ernie Bot was no different from that of any public user. The incident underscores the challenges faced by tech companies in navigating the development and deployment of dual-use technologies while maintaining distance from their national militaries.