BEIJING (Reuters) - TikTok owner ByteDance on Wednesday released an update to its flagship AI model aimed at challenging Microsoft-backed OpenAI's latest reasoning model products, as a global race intensified to create AI models capable of tackling complex problems.

The company released Doubao-1.5-pro, an upgrade to its flagship AI model, which it claims outperforms OpenAI's o1 in AIME, a benchmark test that measures how well AI models understand and respond to complex instructions.

ByteDance's release comes after Chinese AI startup DeepSeek rolled out an open-source reasoning model called DeepSeek-R1 on Monday that it said rivalled OpenAI's o1 on several performance benchmarks.

DeepSeek drew widespread attention in global AI circles last month after tests showed its V3 large language model outperformed those of OpenAI and Meta, despite a smaller development budget and plans to charge users a lot less.

The developments in AI reasoning by ByteDance, DeepSeek and others is likely to challenge the market share of OpenAI and other large language models in terms of both performance metrics and fees charged to users.

Other Chinese firms that have unveiled their own reasoning models in the past weeks include Moonshot AI, Minimax and iFlyTek.

OpenAI triggered the race in AI development after it launched ChatGPT in November 2022 and its "Strawberry" series of AI reasoning models in September last year. The latter are capable of reasoning through complex tasks and solving more challenging problems than previous models in science, coding and math.

Last week, OpenAI CEO Sam Altman said they had finalized a version of its new reasoning AI model o3 mini, and would be launching it in a couple of weeks.

DeepSeek proposed a cut-price fee offering for accessing and using DeepSeek-R1, at 16 yuan ($2.20) per million tokens, considerably less than OpenAI's o1 438 yuan for the same usage.

ByteDance's pricing is even more aggressive. Doubao-1.5-pro-32k costs 2 yuan per million tokens for output, while its more powerful Doubao-1.5-pro-256k version is priced at 9 yuan, according to ByteDance's cloud platform Volcano Engine.

($1 = 7.2798 Chinese yuan renminbi)