Will Tencent’s red packet cash giveaway work again in crowded AI market?

Chinese tech giant Tencent Holdings aims to replicate the success of WeChat Pay by splashing cash for its artificial intelligence app Yuanbao, but analysts are sceptical about whether subsidies can move the needle in the increasingly crowded market.

Yuanbao’s 1 billion yuan (US$144 million) promotional campaign, which gives out cash through digital red packets to drive adoption, kicked off with a high-profile launch on Sunday, as many users woke up to find their WeChat groups flooded with referral links to the AI app.

Tencent is aiming to stir up the AI market, but rival platforms are not sitting idle. On Monday, Alibaba Group Holding’s Qwen AI app joined the cash-incentive battle with a 3 billion yuan campaign, offering users free meals and activities for orders on online marketplace Taobao, instant commerce service Shangou, online travel agency Fliggy, and other platforms operated by the Hangzhou-based giant. Alibaba owns the South China Morning Post.

Yuanbao shot to the top of Apple’s iOS chart for free apps on the campaign’s debut, surpassing Doubao.

It experienced a temporary service outage on Sunday evening, triggered by “a sudden surge of instantaneous traffic”, Tencent said. The service resumed on Monday morning, according to the company.

The Yuanbao campaign is striving to evoke a sense of deja vu from the sensation WeChat stirred in 2015, when hundreds of millions of users shared 500 million yuan in digital red packets during the Spring Festival, effectively disrupting the dominance of Alipay’s mobile payments service in mainland China. Alipay is operated by Ant Group, the fintech giant affiliated with Alibaba.