Tencent Bets on Small Models and AI Agents to Take on Competition with a Differentiated Path

As the competition in China's AI landscape intensifies, Tencent is forging a path that is distinctly different from Alibaba and ByteDance.

At a media briefing on Thursday, Dowson Tong, Tencent's Senior Executive Vice President and CEO of the Cloud Business Group, revealed that AI now contributes over 20% of Tencent's revenue, with more than 95% of new internal code generated by AI. Tencent's core differentiation lies in leveraging a vast ecosystem of WeChat's 1.4 billion users, developing intelligent agent applications based on small models, rather than betting on the large language model arms race.

In terms of competitive dynamics, the companies have diverse approaches: Alibaba enters from e-commerce and cloud infrastructure, focusing on building large models and reducing computing power costs; ByteDance, driven by traffic, heavily invests in DouBao with advertising monetization as the core goal; Tencent, on the other hand, combines small models with the WeChat "Mini Programs" ecosystem to develop intelligent agent products capable of performing complex tasks autonomously.

Tencent has launched several AI intelligent agent products: Work Buddy, an enterprise productivity assistant for market research and data analysis, CodeBuddy, an AI development platform for large enterprises, and Miora, an AI creative studio. Among them, Work Buddy currently has over 800,000 users and led the Chinese market with over 200,000 weekly active users between March and April this year, while Alibaba's competing product, QoderWork, had less than 100,000 weekly active users.

Regarding model selection, although Tencent has widely integrated DeepSeek into its main products such as WeChat, Tong disclosed that over 70% of users of Tencent's Yuanbao chatbot are still using Tencent's self-developed Hunyuan model instead of DeepSeek.

In terms of monetization strategy, Tencent currently focuses on enterprise subscriptions and has no plans to charge individual users, contrasting with DouBao's recent trial of charging for personal premium features.

Regarding chip procurement, Tong did not directly respond to whether Beijing has approved Tencent's purchase of Nvidia H200 chips, merely stating "the government has always been very supportive of us expanding our computing power to meet the explosive demand for AI", and revealing that Tencent will import chips from both global and domestic semiconductor companies, with plans to increase domestic chip procurement later this year as domestic chip production capacities increase.