The Folly of Suppression: Why Banning ChatGPT in China is Doomed to Fail

0:00What can 160 years of experience teach you about the future? When it comes to protecting what matters, Pacific Life provides life insurance, retirement income, and employee benefits for people and businesses building a more confident tomorrow. Strategies rooted in strength and backed by experience. Ask a financial professional how Pacific Life can help you today. Pacific Life Insurance Company, Omaha, Nebraska, and in New York. Pacific Life and Annuity, Phoenix, Arizona. Welcome to the ChatGPT podcast. Today we are talking about OpenAI and ChatGPT versus China, the Chinese government and some of the competitors coming out of China, including Baidu's ChatGPT like app, which what are they calling it now?

0:45I believe it is called ErnieBot. I'm going to talk to you about which of these I think is going to be the winner because one of them is going to be massively more disruptive than the other. I'm going to talk to you about why and we're going to dive into a little bit of the whole geopolitical Chinese innovation technology sector, what's happening in AI, and how this isn't something that is new. This has been going on for a little while. And so we're kind of now starting to jump into it. So we're going to be basing this off of three basic articles, one on routers, one on Forbes, and one on the New York Times.

1:20So first, I wanted to jump over to the Forbes article. It's titled ChatGPT reportedly blocked on Chinese social media apps as Beijing spreads claims AI is used to spread propaganda. So pretty much the top line on this is that regulators in Beijing have ordered the country's top tech companies to ensure that their platforms do not offer access to OpenAI or ChatGPT or any other services powered by that chat bot. So what's interesting about this is they're essentially just saying that it is a service, it's a potential enabler of American propaganda, which I mean, it like it is technically giving a perspective.

2:02It's technically giving the American perspective on a lot of things too. And it's also a perspective that is predominantly leaning towards certain political parties. You could fairly accurately say, right. You can look at the news article that came out recently. It's like why it's a Democrat. So obviously they see like some sort of bias in it. But what's interesting is here in America, right? Like some company, some, you know, people complain that, um, you know, YouTube has a left leaning bias and Rumble is competitor definitely has a right leaning bias. Like that doesn't mean that you just boycott a system altogether or the government needs to ban it because it, because it has a different algorithm.

2:41Sorry. Everyone says it's a private company. It can do whatever it wants. So it's just kind of funny when you look at China, they feel very threatened by information and anything that they feel like could threaten their, you know, their monopoly on information. So they just they always kind of resort to banning things, which if you think that's the way to spur innovation, you'd be wrong. And I think China knows this. So it's kind of interesting because it's, you know, China says they're going to become the predominant player in AI. They've actually been saying this for for a number of years now.

3:10But it's interesting the way they go about it. And people criticize them because essentially, they say they want to become the leaders in AI. They're like famously, China has been saying for the last number of years, like we publish more AI papers than America were leading the charge on AI. And if you looked at them five years ago, it actually seemed to be that it was kind of tipping in their favor with China being, you know, the big guy when it came to AI. But what is really interesting is regard, even despite China producing more research papers about AI, it was actually funny because the citations of the research papers are significantly lower than the citations of the American research papers and what this suggests, citations of, sorry, not research papers, patents, AI patents.

3:55That's what I've been talking about. And what's interesting about the citations of these AI patents is that the number of citations towards a patent is how you can tell if the patent is like very original and it has a lot of unique ideas in it, or if it's of a copycat which china has traditionally been criticized for um copying things right like they come out with a phone and then somehow the ip for that phone gets stolen mysteriously and then a chinese company comes up with the same phone or a phone that has the same specs with a different name so you know this is definitely intellectual property theft and all that kind of thing is something that china has struggled with for a long time copying things um some people say that is due to the way that the country's set up, the way it rewards things, because it doesn't punish that kind of stuff.

4:43So there's all sorts of different reasons and arguments around that. But the fact of the matter is it seems to play out in tech. And China has been kind of tooting their own horn for a while about publishing or getting more AI patents. But it would appear that those are less original than the ones coming out of the States. So I don't know if that really is indicative of China being ahead on the AI race. In any case, when it comes down to it, ChatGPT was not invented in China as an article in the New York Times says. It's called Why China Didn't Invent ChatGPT. And essentially, their argument or their theory on this is that the state's hardening censorship and heavier hand have held back its tech industry.

5:31So entrepreneurs are reluctant to invest for the long term. It wasn't always that way. In the past, when in the in the 90s, emerging in the 90s, a majority of China's tech companies were actually funded by outside money outside of China. And actually, the government largely left them alone. Because to them, they honestly, frankly, just didn't really understand the internet very well didn't think this would be very impactful. But as we've seen, as time has progressed, the bigger these tech companies have gotten, and I mean you could say the more powerful, right? Because when a tech company gets really powerful, it has control over algorithms.

6:05It has control over what content people see. And China has started to really kind of crack down to the point where you see people like Jack Ma. He's like the guy that is in charge of Alibaba, the CEO, the founder. So the equivalent of, pretty much China's version of Amazon. And when he started getting big, he said he was going to launch a new financial services product because he did this like tour like any entrepreneur would do where he was like, yeah, the financial services products in China are bad. The banks are old. And China did not like that he was saying that, that he was criticizing their system, even though like, how do you create innovation?

6:44You criticize the past and you try to make things better, right? So that was what he was doing. Anyways, Jack Ma disappeared for a couple months, I believe. no one saw from him. And then when he reemerged, he was kind of stepped far back. I don't know if he was even the CEO of Alibaba anymore, if he was on the board or not. And all of a sudden, he decided he was a painter and Jack Ma was a painter and he just liked to paint at his house and he didn't have very many opinions. So stuff like that really makes you skeptical of it's I mean, unfortunately, China could be a place with incredible tech innovation, obviously, a lot of really smart people there.

7:21And it does seem like the government there is sabotaging it for their own power. And so we bring that whole, that context of that discussion into AI, and it looks like the same thing is being repeated. So China tells all of the companies within China, you know, go and ban chat GPT and anything like that, because it's an America propaganda machine. We don't like any unique ideas or any ideas that criticize us. You know, that's just China's authoritarian way to do things. And so then enter Baidu's chat GPT clone or lookalike thing, which is called Ernie. So what's interesting, I was actually talking to an investor today.

8:00I was raising funds for an AI project. And of course, investors, what they love to do when you first, you know, when you go and pitch is they pretty much tell you how terrible the market is. They try to beat you up on that so that they can lower your valuation. And one thing this guy was saying was, you know, he's saying, hey, look, like, you know, I know you want to do AI and this like thing you're doing is going to be like revolutionary or whatever. But I don't think it's as good as you think, because there's going to be these big competitors that come in and crush you and you're relying on open AI and chat to like technologies to integrate into your platform.

8:31And you know, we actually use a whole bunch of different technologies integrated into our platform. So you know, there's not really a risk of which one wins doesn't really matter to us. But in any case, he was like, you know, there's this new one coming out of China. And I was just listening to Beidou's earning calls today. And it looks like it's going to be big. And I think it's going to disrupt stuff. So I don't really know, blah, blah, blah. That was like his, that was this thing. Anyways, it's interesting, because looking at the context of what's happening with AI in China, what they're able to produce, I am very skeptical that Beidou's competitor is going to be great.

9:03I mean, you probably will have the aspect that you'll have the aspect that it's going to have adoption because number one, China is going to ban American companies like they do with Facebook and Google and all the other American tech companies. And then they're going to just force their citizens to use it. So like it will have mass adoption. It will be powerful. They're going to have a lot of data from that. However, I don't think it's going to be as innovative. I don't think it will be as disruptive because by nature, if it becomes too innovative and too disruptive, the Chinese government is going to put their foot down and stop it, right?

9:37They kind of like the AI for the aspect of facial recognition to control their citizens. And they might not like it so much when it comes to disrupting large areas and consolidating power to, you know, the owners of those companies. So China's so talking about kind of what they're what they're creating there, the CEO, pretty much, he jumped on their fourth quarter results. And he was talking about it. He said that it's going to enhance users' experiences and users will be much more dependent on us for all kinds of tasks and needs, therefore significantly expanding the market size of search engines, he said.

10:13So pretty much what's happening, Beidou also, it's worth noting that their market share in China has been chipping away for a while, right? China kicked out Google, or maybe they weren't even let in in the first place. I know they were in Hong Kong. I visited China a number of years ago and was able to use Google, but it was Google's Hong Kong version. And, um, since that, since China, since Google left, you know, baby was the big one and, you know, obviously government backed, but it's actually been chipped away by 10 cent, the owner of, um, the owner of WeChat. Um, and then also ByteDance, the owner of TikTok.

10:48Um, those, I guess they have like these big, in China, they got these big, like all in one messaging app things that like, it has got like Uber and Airbnb and like everything on it. And I guess those must have search engines. And so those are kind of chipping away at its market share. So it's making a, you know, it's making a claim that this new chat GPT of China pretty much is going to help it get ahead and make more money, which is interesting because people are saying the exact opposite for Google. They're like, man, Google's kind of screwed because this is going to take away their ad revenue.

11:16If you're just showing results, you're not showing all the ads and the results. If you're just giving people answers, you're not showing all the ads and the search results. And so, you know, China's going to, or Google's going to take a hit in revenue. So it's interesting. They're taking the opposite side and saying, we're going to make even more revenue. And they actually, it's interesting looking at what they said. They really didn't elaborate much on how it was going to make more ad revenue in search. So I'm skeptical of that. And I think they're just, you know, just trying to put a positive spin on what's happening.

11:43And I mean, no doubt they're going to take market share and users. So that'll be good for them in that regard. What they did say though is they said that essentially the generative AI technology underpinning ErnieBot would be a productivity boom for other businesses and entrepreneurs looking to build their own apps. And they said that since February, more than 400 companies have signed up to join the ErnieBot community as early users of the app. Again, like I know, I don't know what, this is a publicly traded company. This is the biggest search engine in the world or in the world. I don't know.

12:20They compete with Google. So they're, they're definitely one of them. But like, if Google said we have 400 companies that signed up for a new service, that's like, okay, great. Like chat GPT, do you know how many companies have like, are integrating chat GPT technology? It's DaVinci three. Yeah, I know. It's a different thing. It's their API, but like, there's like thousands and thousands. And so it's just kind of funny that like, these guys are like bragging about 400 when like this little, you know, this AI company came out and it's gotten a hundred million monthly active users in two months and, you know, it was making Google shaking its boots.

12:54And then these guys are like, yeah, we got 400 companies. We're going to like make a lot more money now. I don't know. I'm skeptical. In any case, dozens of Chinese tech companies, including Alibaba and JD.com have announced plans to develop their own chat GPT style tools. As we know, with kind of the direction of everything going on in China. These are going to be heavily regulated by the Chinese government. What they've said though, their big thing is they said that they've spent years developing large language models that were trained on billions of daily search requests inputs by its search engine users.

13:29So this is very interesting. What's happening right now is when OpenAI came out, yeah, I mean, kind of OpenAI sort of scammed in a sense that they said, we're an OpenAI, we're going to make this AI that is good for everyone to use, and it's going to be open source and it's going to be like free for people, whatever. So then they pretty much got all these companies that gave them access to all of their data. They sucked it into a vacuum. They got a bunch of money, sucked in all the data and then said, just kidding. We're a for-profit company. Thank you for a billion dollars, Microsoft. A few years later, thank you for$10 billion for Microsoft.

13:59And they sold half the company essentially to Microsoft. So Microsoft owns like 50 % for the$10 billion they just gave them. And so that was, you know, some people call that a scam. But China is not going to be able to do that. Baidu is not going to be able to go to American companies like Twitter and just get access to all the raw comments through an API. But what they're saying that they've gotten there all their data from is the billions of searches they get on their search things. However, I am inclined to think that this is actually going to be, perhaps it's going to be a really good tool for search, but I think it's going to be a much worse tool than ChatGPT when it comes to results because ChatGPT was able to train on like every book ever written and all the data on the entire internet because everyone gave it to them for, you know, next to nothing, sometimes free.

14:45Everyone gave them access though. And this Chinese company is not going to get access. So it's going to be interesting to see what happens in this specific space. Now, as far as why China is going to struggle, I think, is just the fact that, you know, the development of any significant technology product is inseparable from the system and the environment in which it operates, says Xu Chengjeng, a senior, a research scholar at the Stanford Center of China's Economy Institute. So he said that TikTok, Chinese, TikTok's like, so TikTok is what we have in America, but in China, they have one called Duyin.

15:23And essentially, they say the algorithms are different. Like here in America, they feed us like all these videos of just people doing these dumb dances. And then in China, they're like showing all the kids videos of like scientists and researchers and like cool stuff to like make them more productive. And here they're just trying to dumb us down. So that's a, you know, that's an interesting psyops that they are claiming TikTok is doing. But in any case, China's version, this Stanford researcher said that the innovation from that Chinese company might be, it might be unable to achieve, Chinese companies might be unable to achieve in the future because of government limitations on the industry.

16:03So essentially, once the open environment is gone, it's going to be a challenge to create these products again. If a decade ago, China was the wild east for tech entrepreneurship innovation, it's a very different country now. They're shutting down a lot of this stuff that they view as threatening to them. So it's going to be very interesting to see how this plays out. And it's also interesting because Beijing literally is punishing a lot of different companies. Specifically, they published or they punished like Duolingo because it's a pretty uncontroversial app. It's just for learning languages.

16:35But they pulled it from the store, I think for over a year because they said that it needed to retrain on, you know, Chinese stuff and, you know, pretty much sense or better. And it's kind of interesting because they do this with a lot of things. And so I really find it very hard to believe that China is going to be able to pull out a superior product than ChatGPT, which is trained on all of the internet. and is not getting a lot of regulatory pushback at the moment. And so the way that they run things, it really doesn't feel like they're going to be coming up with anything super innovative at the moment, at least that's not going to compete on the same level.

17:13So it'll be interesting to see if they prove me wrong and create an incredible product. It'll be interesting to see if that's able to get any adoption in the West, in Europe, America, Canada, these kinds of countries that are deeply suspicious of China and it's a kind of spy state that it has. It's watching people. So it'll be interesting to see what happens with this, but this is the current climate of ChatGPT and OpenAI versus China and what is happening. So thank you so much for joining us on the ChatGPT podcast today. If you liked this podcast and you like this news, you need to subscribe to our newsletter.

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