Baidu nasdaq Bidu Shares Slump Amidst Ai Chatbot Controversy

Baidu (NASDAQ: BIDU) Shares Slump Amidst AI Chatbot Controversy

Baidu (NASDAQ: BIDU) shares declined 7% on Monday even after the company rejected a newspaper report that suggested its artificial intelligence chatbot, Ernie, was associated with Chinese military research.

Baidu (BIDU) has dismissed a newspaper report alleging that its artificial intelligence chatbot, Ernie, had connections to Chinese military research.

On Friday, the South China Morning Post referenced an academic paper from a university affiliated with the People’s Liberation Army cyber warfare division. The paper disclosed that the division tested its artificial intelligence system on Baidu’s Ernie and iFlyTek’s Spark, two language-based AI chatbots comparable to ChatGPT.

Baidu swiftly refuted the allegations after its Hong Kong-listed stock experienced a more than 11.5% drop on Monday. The company stated that it had not collaborated in any business with the authors of the paper or their affiliated institutions.

The Chinese company said in its statement,

“Ernie Bot is available to and used by the general public.”

The academic paper from the PLA Information Engineering University outlined how researchers provided prompts to Ernie Bot, instructing it to generate simulated military response plans for Libyan troops in case of a U.S. military attack.

Baidu (NASDAQ: BIDU) said that if the authors employed large language models such as Ernie Bot, they would have used the functions available to any user interacting with such AI tools.

Like ChatGPT, users can interact with Ernie Bot by posing questions or requests, and the bot generates content based on the provided prompts. However, like numerous other online services in China, Ernie Bot adheres to censorship regulations and refrains from addressing inquiries considered politically sensitive or taboo by the Chinese government.

The South China Morning Post report initially mentioned a “physical link” between Ernie and the PLA division. The reference has now been revised to state that the PLA lab tested its system on Baidu’s AI model.

The decline in Baidu’s stock price underscores investors’ concerns that Chinese technology firms associated with the Chinese military or government might face sanctions from the U.S., akin to what happened with Chinese telecommunications giant Huawei, which the U.S. views as a security risk.