(Yicai) Feb. 3 -- Alibaba Group Holding is entering a high-stakes Lunar New Year battle among China’s artificial intelligence apps, with its Qwen assistant set to roll out a CNY3 billion (USD420 million) subsidy campaign to drive downloads and encourage use of its AI-powered shopping features.

Users will receive sizable red envelopes as part of Qwen's Spring Festival Treats Program under the slogan "Eat, Drink, Play, and Get Rewarded Non-Stop," Alibaba announced late yesterday, without providing further details. Red envelopes, or hongbao in Chinese, are a traditional way of gifting cash in China, particularly during major holidays.

Yicai learned that Qwen's user-acquisition campaign will launch on Feb. 6 and will include various Alibaba apps, such as Taobao Flash Sale, online travel agency Fliggy, ticketing platform Damai, grocery chain Freshippo, Tmall Supermarket, and payment platform Alipay.

“Most AI assistants on the market are still at the stage of simply chatting with users,” a member of the Qwen team told Yicai. “Qwen’s goal is to embed itself directly into people’s everyday spending and consumption activities during this year’s Chinese New Year.”

Qwen also plans to open up to third-party business ecosystems after the Chinese New Year, Alibaba Vice President Wu Jia has said perviously.

Other tech giants are also ramping up promotion of their AI assistants during the Lunar New Year holiday period, known as the Spring Festival in China, which this year runs from Feb. 15 to 23.

ByteDance’s cloud computing unit Volcano Engine has become the exclusive AI cloud partner for China Central Television’s Spring Festival Gala, introducing its Doubao assistant to hundreds of millions of viewers. Baidu has announced plans to distribute CNY500 million (USD71.9 million) to users of its AI assistant, while Tencent Holdings has already launched a CNY1 billion (USD144 million) red envelope campaign for its Yuanbao assistant.

Yuanbao, which was the first to start its marketing campaign, has already seen a jump in downloads, surpassing Doubao to rank first on the free app download rankings of the Apple App Store as of yesterday. Qwen ranked seventh.

Giving away red envelopes fits closely with the festive atmosphere of Chinese New Year and has long been a staple marketing tactic for China’s internet giants, internet analyst Zhang Shule told Yicai. Such campaigns are effective in prompting users to download new apps and begin forming usage habits, Zhang added.

“AI assistants are the most important new products tech companies need to promote during this year’s holiday,” Zhang noted. “By handing out red envelopes, they hope to encourage more potential users to install their apps and experiment with different AI uses, ultimately positioning the assistant as the user’s primary AI entry point.”

But while red envelopes can help to drive traffic, they are not enough in themselves to determine the outcome of the competition for AI entry points because they are just a perk and do not reflect the capabilities of the AI apps themselves, Zhang stressed. So the Lunar New Year red envelope battle among AI assistants is unlikely to result in a meaningful shift in market share, he said.

Editors: Tang Shihua, Martin Kadiev