Transcript: AI chatbot race enters crunch phase – Financial Times
Marc Filippino, Melissa Heikkilä and Eleanor Olcott
Published
This is an audio transcript of the FT News Briefing podcast episode: ‘AI chatbot race enters crunch phase’
Marc Filippino
Good morning from the Financial Times. Today is Wednesday, December 3rd and this is your FT News Briefing.
The British political landscape might be looking very different soon. And OpenAI could be losing its lead over its rivals. Plus, China’s biopharmaceutical sector is rapidly expanding.
Eleanor Olcott
I think the next big question is whether or not some of these Chinese biotechs can actually strike out on their own and become the Pfizers, become the Eli Lillys, become the AstraZenecas of tomorrow.
Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.
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Nigel Farage has told donors he expects a deal or merger between his Reform UK party and the Conservatives ahead of the next general election — that’s according to donors who spoke to the FT. It suggests that Farage doesn’t think he can win an election alone. The next general, by the way, will be held by 2029.
The rightwing populist party has surged lately. It’s currently leading in the polls at about 30 per cent. Meanwhile, the Tories are hanging out at about 17 per cent. But talks about a deal shows the challenges in turning political momentum into actual power. A split vote on the right could allow left-leaning voters to combine forces and keep reform out of office. Farage, however, told the FT that a deal with the Conservatives as they are would, quote, cost us votes.
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The artificial intelligence chatbot race is really heating up. This week, the French start-up Mistral unveiled powerful new AI models. The announcement came just days after OpenAI’s Chief Executive declared a quote, code red. Sam Altman said his company needs to improve ChatGPT because rivals are closing in on its early lead in the AI space.
So, where do things stand in the world of AI-fuelled chatbots?
The FT’s AI correspondent Melissa Heikkilä is here to tell us. Hi, Melissa.
Melissa Heikkilä
Hi.
Marc Filippino
All right, so let’s start with Mistral. Does its announcement offer any relief to those concerned that Europe is falling behind the US and China in AI development?
Melissa Heikkilä
So to some extent, yes. What we have to remember is that the game is still very much on, the race is still wide open, we don’t have any clear winners or losers. And so what Mistral is doing, they released these powerful models that can be used in different languages and also handle things like images, audio, text. And that gives them an edge, right? Because a lot of these leading language models are in English. So if you’re a European player, maybe an Asian player, you can use Mistral’s models instead and get much better results.
And what Mistral has also done is that they’ve released smaller models which can run offline on devices. And that could be a big game changer if you were running something secure like defence drones, for example.
Marc Filippino
Now, as I mentioned earlier, Sam Altman — OpenAI’s CEO — is really feeling the heat here from some of his competition. What does his code red mean for the company?
Melissa Heikkilä
So for the longest time, OpenAI had this massive moat because they were the first ones to kind of kick-start this boom, and for, you know, three years they’ve been leading the race. They’ve had the best, most powerful models. But now their lead isn’t that clear anymore. Just a few weeks ago, Google launched Gemini 3, which is their most powerful model, which leapfrogged OpenAI’s GPT-5 in several key benchmarks. And so OpenAI is under immense, immense pressure. They have to show that they have something new up their sleeves, that they actually still have this edge and they’re racing to roll it out.
Marc Filippino
Yeah. And now, not only are they getting competition from these big tech companies like Google, they’re also getting them from even smaller companies like Mistral. How meaningful is that to OpenAI?
Melissa Heikkilä
Very meaningful. I mean, what do you have to remember? Everyone is talking about the AI bubble right now. Whether the trillions of dollars pour into this technology will actually lead to anything meaningful, will we see a return on investment? And so there’s also that immense pressure, not only competing on the frontier — whether you have the most powerful models, whether you get to artificial general intelligence first — but also, are your models useful? Do they get adopted? Where are we going to see that return on investment? And I think they have to grapple with those both.
Marc Filippino
So Melissa, obviously, things in the world of AI move very fast. You’re very busy these days. What are you watching as we head into the new year?
Melissa Heikkilä
The race for search dominance is definitely one of the things to look out for next year.
When OpenAI first introduced ChatGPT, people were using it as a search engine and it was very much seen as a threat to Google’s search dominance. And now Google has flipped that because they have an existing massive user base and they can integrate these AI models into these products directly.
And so that’s a big advantage OpenAI just doesn’t have. One big thing I’ll be looking at is the sort of geopolitical race surrounding AI. The US is extremely anxious. They want to be the world leaders, but China’s right up there. China has incredible talent and now they’ve been pushing open source models really aggressively. And so having the model that everyone uses will be a massive, massive fight next year.
Marc Filippino
Melissa Heikkilä is the FT’s AI correspondent in London. Thanks, Melissa.
Melissa Heikkilä
Thank you.
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Marc Filippino
Eurozone inflation unexpectedly ticked up last month. Figures out yesterday showed that it was at 2.2 per cent in November. Economists predicted that it would hold steady at 2.1 per cent. Services inflation increased for a third month in a row, but core inflation, which strips out food and energy prices, stayed the same.
The European Central Bank meets later this month and it’s expected to keep interest rates on hold at 2 per cent for the fourth consecutive time. Seems like yesterday’s inflation report didn’t change that. Market expectations for rate cuts stayed about the same.
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Five years ago, China’s biopharmaceutical sector couldn’t produce an effective Covid-19 vaccine. But now, record investment is pouring into the country’s industry and western pharmaceutical executives are worried that their companies could lose their lead to China.
I’m joined by the FT’s Eleanor Olcott to talk about this. Hi, Eleanor.
Eleanor Olcott
Hi.
Marc Filippino
So Eleanor, what has the Chinese biopharma sector looked like over the past couple of decades?
Eleanor Olcott
We saw the first initial rise of the Chinese drug industry in about the late 1990s, with a number of generic drugmakers producing off-patent drugs for the Chinese market. And in the early 2000s, we then saw the evolution of outsourcing companies that would be doing research and manufacturing on behalf of foreign biotechs.
And slowly over time, these clinical research organisations and clinical contract manufacturing organisations accumulated more and more knowledge. And those people started to go off and start their own companies, they started to hire from the foreign pharmaceuticals, they started to attract Chinese talent that had been trained overseas. And suddenly, you have this confluence of factors that is contributing to the evolution of indigenous innovation.
Marc Filippino
And why are China’s biotech start-ups continuing to do so well?
Eleanor Olcott
It’s really simple. It’s just down to speed. From the very beginning, you are having to do a lot of lab work in order to iterate and figure out what the right recipes are for your drugs.
China is able to cut that down just by the sheer volume of lab workers and researchers they have working on this. And this goes through right up until the time that they’re testing the drugs, which can be very, very lengthy. And is the most expensive part of drug development is the clinical trials.
And here, China has a really distinct advantage. It’s got a massive population that is online and is underserved in terms of their medical coverage. So that means you have a lot of sick patients who have ready access to information about clinical trials, who are willing and able to kind of volunteer for this.
So it’s just a really great place to run clinical trials. And for biotechs that are wanting to test out their ideas, this really is a gold mine.
Marc Filippino
And how has the government in Beijing supported this? Is it seen as a strategic sector?
Eleanor Olcott
Biotech is absolutely seen as a strategic sector for two reasons: first of all, their policymakers have outlined biotech as a future growth engine for the economy, along with AI and manufacturing.
But secondly, they also think that China has become overly reliant on imported medicines. And that’s bad because they want medicines that are tailored for the ethnic Chinese population. So in the mid-2010s, they introduced a number of reforms to make it easier for biotechs to raise money and also to pursue drug innovation and development. And really, what we’re seeing today is the fruits of those policies and investments bearing out.
Marc Filippino
So, what do you think, Eleanor, does the industry have any interest in growing beyond China and maybe going global?
Eleanor Olcott
So 2025 has been a time where all of the major pharmaceutical companies have been doing their shopping in China. A record number of deals of Chinese biotechs selling assets to these companies has been struck. But I think the next big question is whether or not some of these Chinese biotechs can actually strike out on their own. And not have to go into the foreign markets via these international partnerships, but actually become the Pfizers, become the Eli Lilies, become the AstraZenecas of tomorrow.
This is still very much an open question. If you look at the list of the top global pharmaceutical companies by market capitalisation, there are no Chinese companies in the top 20. So they obviously have a long way to go in order to compete with some of these players.
Marc Filippino
Eleanor Olcott is the FT’s China technology correspondent.
Thanks, Eleanor.
Eleanor Olcott
Thank you.
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Marc Filippino
Before we go, if you’re hoping for news about the next chair of the Federal Reserve, you are going to have to wait a little longer. US President Donald Trump said yesterday that he’ll announce Jay Powell’s replacement early next year. Powell’s term as chair ends in May. Senior administration officials are expected to interview candidates for the next Fed chair over the next couple of weeks; those officials will include Trump and vice-president JD Vance. The president hinted in two separate public appearances yesterday that the next chair could be Kevin Hassett, director of the National Economic Council.
You can read more on all these stories for free when you click the links in our show notes.
This has been your daily FT News Briefing. Check back tomorrow for the latest business news.
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