Alibaba Cuts Prices on AI Models Up to 85%, Strengthens China’s AI Competition

Highlights:

Alibaba Cloud is slashing nearly 85% of its Qwen-VL virtual language prices.

This will increase competition between China’s tech giants, namely Tencent, Baidu, and ByteDance, in the rapidly growing AI market.

Qwen-VL, developed by Alibaba, is an AI model designed to process both text and images. Unlike ChatGPT, Alibaba’s Qwen-VL is designed specifically for business customers, rather than a consumer-focused AI chatbot.

Key background:

Alibaba Cloud, the cloud computing arm of China’s e-commerce leader, on Tuesday announced a price cut of up to 85% on its main language model, Qwen-VL. This is one of the fiercest battles being waged by Chinese experts to curb the fast-growing artificial intelligence market.

Large-scale linguistic models (LLMs), which generate human-like responses by processing large amounts of data, are essential for generative AI applications, including tools such as OpenAI’s ChatGPT. Alibaba’s Qwen-VL, designed to translate both text and images, is a key part of its strategy to dominate the emerging AI sector. The price cut aims to attract more business customers by making its AI technology more accessible.

This comes against a backdrop of fierce competition among heavyweights such as Tencent, Baidu, JD.com, Huawei, and ByteDance, which in the past 18 months have all released their LLMs. In a world where artificial intelligence is quickly becoming the backbone of new technologies, these companies are competing for dominance.

Alibaba had already cut prices on a range of cloud products by 55% in February, and by 97% on its Qwen AI model in May. All of these are strategic pricing actions within Alibaba’s larger effort to expand its AI offerings to business users, rather than trying to directly compete with consumer models like ChatGPT.

Despite the drop in prices, Alibaba shares did not react much, closing 0.5% higher in year-end trading in Hong Kong. However, Alibaba Cloud’s push to make AI more affordable shows the company’s seriousness about capitalizing on the ever-growing demand for business AI applications. Currently, the company reported that its Qwen models have been used by more than 90,000 business users.