ByteDance and DeepSeek Are Placing Very Different AI Bets

The Two Paths of Chinese AI: DeepSeek and ByteDance

The realm of artificial intelligence (AI) is undergoing a significant transformation, with various companies adopting vastly different strategies to stay ahead in the game. In China, two prominent players, DeepSeek and ByteDance, are taking distinct paths that reflect the diverging trends in the country's AI industry.

DeepSeek: The Open-Source Model Champion

DeepSeek, a Chinese AI startup, has been making waves in the industry with its open-source models. The company's latest release, DeepSeek V3.2, has sparked excitement among AI enthusiasts and investors alike. According to DeepSeek, its model performs on par with the latest models from OpenAI and Google, and even beats them on some key mathematics benchmarks.

However, some of DeepSeek's most loyal followers are still waiting for R2, a much-anticipated update to the initial model that rocked Silicon Valley in January. Instead, DeepSeek released V3.2 and V3.2-Speciale, which are better-optimized versions of its previous model V3.2-Exp, released in September.

DeepSeek's focus on model efficiency has differentiated it from its Western counterparts. As a startup, the company reportedly doesn't have access to an abundant supply of computer chips, which has led it to prioritize efficiency in its models. As a result, its models often use fewer computing resources to train and cost developers less to run than those from Western labs.

Efficiency is a crucial aspect of AI development, especially for startups. An open-source model is superior both in terms of costs and customizability, according to Steve Hsu, a physics professor at Michigan State University and an AI startup founder.

ByteDance: The Operating System Ambitions

ByteDance, the social media giant behind Douyin (TikTok), is taking a completely different approach to AI. The company is working with a Chinese smartphone manufacturer to embed its chatbot, Doubao, into the operating system, giving it access to different apps and allowing it to conduct agentic tasks with them.

ByteDance's most ambitious move recently came on Monday, when it released a Doubao AI agent that can be integrated into a smartphone's operating system, giving it control over any app. In a preview video, ByteDance shows how Doubao can access Tesla's app and open the trunk using voice inputs, search through different ecommerce platforms to find the lowest prices, and access photos in a user's camera roll and enhance them with AI.

ByteDance is working with the Chinese smartphone manufacturer ZTE to preinstall the Doubao agent on one of its phone models, the Nubia M153, which sells for 3,499 RMB (about $500). ByteDance says it's also talking to other smartphone makers about installing its agent, but it seems unlikely that many will take it up on the offer—the most popular Chinese smartphone brands, like Huawei or Xiaomi, are all developing their own proprietary AI agents.

The Two Paths Converge

DeepSeek and ByteDance's Doubao represent two ends of the spectrum of Chinese AI companies, while others fall somewhere in-between. Small but mighty startups like Zhipu, Minimax, and Moonshot are following in DeepSeek's footsteps, releasing capable open-source models, while Baidu and Tencent are going the more application-focused route. Alibaba is still mostly on DeepSeek's side, constantly releasing new versions of its open-source Qwen models, but lately, it seems eager to cross over to the other side: Last month, it put out a consumer-facing AI super-app.

ByteDance doesn't have to compete in the benchmark arms race because it already has a gigantic user base, and as a private company, Hsu says, it doesn't need to worry about stock market volatility. "They just have to ship quietly, integrate a really powerful AI model into their existing app, and I think that's what they are doing," he explains.

The Future of Chinese AI

What unites Chinese AI firms is the thing they're not doing. Unlike American tech giants, they're steering clear of the compute hoarding game, where companies keep building more data centers and brute-forcing their way to more powerful models. Partly, that's because of American chip sanctions, which block Chinese companies from accessing cutting-edge chips from Nvidia. But also, "they are just not as well capitalized. They don't have infinite amounts of money the way that American companies have," Hsu says, so it makes sense for them to opt out from the beginning.

This approach has allowed Chinese AI companies to focus on more practical applications, such as integrating AI into their existing products and services. As the industry continues to evolve, it will be interesting to see how Chinese AI companies adapt and innovate.

Conclusion

The two paths of DeepSeek and ByteDance represent the diverging trends in China's AI industry. While some companies are still competing with their Western counterparts to build ever more capable models, others are focusing on how they can integrate their AI tools into people's everyday lives. As the industry continues to evolve, it will be exciting to see how Chinese AI companies adapt and innovate.

The future of AI is not just about building more powerful models, but about creating practical applications that improve people's lives. Chinese AI companies are taking a unique approach to AI development, one that focuses on efficiency, customizability, and practical applications. As the industry continues to evolve, it will be interesting to see how Chinese AI companies adapt and innovate.