China's AI sector is undergoing a significant correction, moving away from the "spray-and-pray" approach of the mobile internet era. Companies like ByteDance are cutting AI projects and pivoting strategies due to high inference costs that scale with usage, unlike the diminishing marginal costs of mobile apps. The traditional playbook of launching numerous products and relying on network effects is failing because foundational models are rapidly absorbing application-layer functionalities, and user switching costs are negligible. AI
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IMPACT Confirms that AI inference costs are a major constraint, forcing a strategic reset in how AI products are developed and scaled.
RANK_REASON Analysis of industry trends and strategic shifts in China's AI sector, rather than a specific event.
