Unfounded rumor caused stock of China’s AI forerunner Baidu to drop

Mark Bai

posted on January 16, 2024 10:11 am

Due to a market rumor, Baidu's shares faced an unjustified 10% drop on the Hong Kong Stock Exchange, prompted by a misinterpreted report from the South China Morning Post. The article, dated January 12, wrongfully insinuated a collaboration between Baidu's ERNIE Bot and a military-affiliated university laboratory. This sparked a rapid sell-off of Baidu’s stocks, impacting the market valuation of this AI industry leader in China.

The South China Morning Post has since amended its initial report by retracting the claim that suggested an active link between Baidu's AI system and the Chinese military. However, the revised article has yet to fully address the spread of the misleading information.

Baidu, in response to the ensuing market panic, issued a statement to clarify the situation. “ERNIE Bot is available to and used by the general public. The academic paper, published by scholars at a Chinese university, described how the authors built prompts and received responses from LLMs, using the functions available to any user interacting with generative AI tools. Baidu has not engaged in any business collaboration or provided any tailored service to authors of the academic paper or any institutions with which they are affiliated. The South China Morning Post, the first media outlet that reported on this academic paper, has clarified and corrected their original media report,” said the report.

The ERNIE Bot is a publicly accessible tool, widely used by over 100 million users since its release in August. Meanwhile, the academic paper at the center of the controversy, authored by a professor from the Information Engineering University, merely documented the use of ERNIE Bot and iFlyTek’s SparkDesk for a study on military tactics—utilizing the same functions available to any user without any military-specific modifications.

It is also important to note that the research methodology of the paper in question, which involved posing questions to chatbots, has been criticized for overestimating its significance in the development of "AI Agents."

Baidu's clarification and the subsequent market reactions underscore the importance of discerning fact from fiction in today's sensitive investment climate.