The first major AI battle in China's tech industry unfolded during the recent Spring Festival, with companies canceling holidays and deploying massive resources. Unlike previous internet wars, this conflict represents a potential turning point where losing could mean forfeiting future dominance.

On Lunar New Year's Eve, tech hubs across China remained active. ByteDance's offices in Beijing's Zhongguancun district were brightly lit, while Baidu's campus in Xierqi and Alibaba's Hangzhou headquarters also maintained operations. This coordinated effort marked the first premeditated, large-scale AI confrontation in China.

Industry giants have previously competed in e-commerce, social media, and mobile payments, but those were limited skirmishes. The current AI competition resembles a decisive battle where defeat could have long-term consequences.

ByteDance invested over 10 billion yuan ($1.4 billion) with its Doubao AI participating in China Central Television's Spring Festival Gala, distributing billions of red packets and gifts. Alibaba spent approximately 30 billion yuan sponsoring four provincial TV galas and promoting its Qwen AI assistant. Tencent allocated 10 billion yuan and Baidu 5 billion yuan to drive traffic to their AI applications.

The campaign significantly boosted AI adoption rates. During the holiday period, hundreds of millions of people used AI to create New Year greetings, generate images, plan itineraries, order food, and purchase movie tickets. ByteDance reported 1.9 billion interactions with Doubao on New Year's Eve alone, while Alibaba claimed nearly 200 million users placed orders through Qwen. Tencent disclosed that its Yuanbao app reached 50 million daily active users and 114 million monthly active users.

However, no single company emerged as the clear winner. The technology still faces a gap between current capabilities and genuine user needs. The critical question remains how many users will continue using these applications after promotional subsidies end.

The competition centered around CCTV's Spring Festival Gala, which previously helped WeChat popularize digital red packets in 2015. Although the gala's influence has diminished somewhat, it remains valuable for user acquisition.

Tencent initially declined to participate in the gala, maintaining its cautious approach toward large-scale marketing. Instead, the company focused on developing new social features for Yuanbao and preparing for DeepSeek's upcoming model release. CEO Pony Ma personally ensured sufficient GPU resources were available for the holiday period.

Alibaba hesitated due to Qwen's recent launch, but ByteDance quickly secured the gala partnership. This prompted Alibaba to sponsor four provincial galas at one-tenth the cost of the national gala sponsorship, while also integrating promotions into Zhang Yimou's holiday film.

Model development timelines significantly influenced strategies. ByteDance's Seed team worked intensively to launch Doubao 2.0 before the holiday, while Alibaba and DeepSeek faced delays with their flagship models. Tencent, having recently reorganized its AI teams, prioritized image generation capabilities.

The competition revealed enormous computational demands. Generating a single holiday greeting or image required millions of times more processing power than traditional interactive requests. Companies with substantial GPU investments but limited data center capacity faced particular challenges.

Tencent initiated the red packet campaign on January 25, but encountered issues when WeChat restricted promotional links for excessive sharing. Alibaba's free-order promotion faced similar restrictions but still processed 15 million orders on February 6—15 times initial expectations.

Regulatory intervention occurred on February 13 when authorities warned against excessive competition. Despite this, activities continued through New Year's Eve with direct cash rewards.

The post-holiday period will test sustainable user engagement. As subsidies decrease, companies must demonstrate real product value. ByteDance leads in video generation with Seedance 2.0 but needs to prove its text capabilities. Tencent pins hopes on its next-generation model under new leadership, while Alibaba focuses on integrating Qwen with its ecosystem services.

The fundamental challenge remains cost structure. Serving 100 million daily users could incur hundreds of millions in monthly inference costs—a burden Chinese consumers appear unwilling to share through subscription fees comparable to international services.

As one Tencent executive noted, defensive participation outweighed complete absence from the competition. The battle has merely begun, with technological advancement and product excellence ultimately determining success.