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(Bloomberg) — Tencent Holdings Ltd.’s Yuanbao AI chatbot passed DeepSeek to become the most downloaded iPhone app in China this week, highlighting the intensifying domestic competition.

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Tencent’s app integrates its in-house Hunyuan artificial intelligence tech alongside DeepSeek’s R1 reasoning model and has taken over at a time of acute interest and competition around AI in the country. Three of the top five most downloaded free apps are AI bots, with ByteDance Ltd.’s Doubao joining Tencent and DeepSeek.

Now a month into its sensational rise, DeepSeek’s chatbot has galvanized China’s tech and internet ecosystem, accelerating investment and new product releases. Alibaba Group Holding Ltd. has started benchmarking itself against DeepSeek and announced a $53 billion investment in AI. Tencent, for its part, has integrated DeepSeek R1 into a slew of its products, including WeChat’s search feature as well as powering a virtual companion in its evergreen game Peacekeeper Elite. Last week, Tencent also launched a Hunyuan Turbo edition that it says is faster than DeepSeek in delivering answers.

Shenzhen-based Tencent is the world’s biggest games distributor and its WeChat platform is used by more than 1.4 billion people. That may have helped it secure the top spot, as the company looks to ramp up its presence in the race for AI users.

Questions persist about how companies will eventually monetize such services, which are presently free to use and increasingly released in open source form for other developers to take advantage of, as DeepSeek does with its AI models. For now, the focus remains on getting the most users on board and Tencent has stolen a march on rivals like Alibaba and Baidu Inc., which have made bigger bets on AI than the Shenzhen company.

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