Alibaba said on Monday it would spend three billion yuan to attract users to its Qwen AI app during the Lunar New Year holiday, heating up a race between China's largest tech firms.

The pledge by Alibaba, which triples the spending promised earlier by rivals Tencent and Baidu, is set to start on Friday. It will involve incentives for dining, drinks, entertainment and leisure, with "large red envelopes distributed continuously," Alibaba said in a statement.

Tencent and Baidu announced late last month they would spend one billion yuan and 500 million ⁠yuan, respectively, on similar promotions for their AI chatbots.

Chinese tech companies have long used the Lunar New Year festive period – when hundreds of millions travel home and spend time with family – as a marketing battleground to acquire new users.

The most notable case was in 2015, when Tencent leveraged its WeChat messaging app to distribute digital red envelopes, helping its WeChat Pay service gain ground against Alipay, which then dominated China's mobile payments market.

Competition in China's AI sector has accelerated since DeepSeek's R1 model launch in January last year rattled global AI markets, spurring both faster adoption and fiercer ⁠rivalry among domestic players.

Tencent's campaign focuses on its Yuanbao chatbot app and starts on Sunday. Users must upgrade the app to the latest version to claim digital red envelopes that can be withdrawn to their WeChat wallets. Users can also share links with cash rewards for others to claim.

Alibaba did not specify whether rewards would be distributed as cash red envelopes or discount coupons redeemable on its platforms including e-commerce site Taobao.

Several other Chinese AI firms have also been releasing upgrades in the run-up to the holiday. DeepSeek is expected to launch its next-generation AI model V4, featuring strong coding capabilities, in ⁠mid-February, The Information has reported. (Reuters)