Alibaba Cloud, the cloud computing unit of Chinese e-commerce giant Alibaba Group Holdings, announced Tuesday that it will cut prices on its large language models by up to 85%.
The company said that it is offering its customers a New Year’s gift by reducing prices on the artificial intelligence model for visual reasoning, at a time when price wars continue to rage in the local artificial intelligence services market in China.
Alibaba will implement price cuts for the third time in 2024
according to South China Morning PostAlibaba’s announcement, which will come on the last day of 2024, is not the first, but the third AI price cut by the cloud unit this year alone. This also comes as competition intensifies with similar initiatives implemented by ByteDance, TikTok’s parent company, as Chinese tech companies seek to attract users in a crowded market.
Alibaba’s Hangzhou-based cloud computing division announced in a WeChat post its intention to offer a price cut on Qwen-VL, its visual language model, which is seen as understanding text and images.
Meanwhile, shares of the e-commerce giant did not move much and closed 0.5% higher on the final day of 2024 trading in Hong Kong.
according to CNBCThe price cuts indicate an intensifying race among China’s tech giants to win more business for emerging artificial intelligence products.
It remains to be seen whether the pricing strategy will lead to widespread adoption of technology companies’ products and services or will merely spark a price war that will erode margins within the sector. according to GorovoxAlibaba’s strategy could be the masterstroke in this crowded AI space. The company wants to be the supplier of choice for companies that want to integrate AI into their operations without breaking the bank.
Alibaba faces strong competition from its peers in China
Competition for big language models in the Chinese market has intensified in the past year as each tech giant seeks to stay ahead of the AI race.
This follows OpenAI’s ChatGPT launch in November 2022 to immediate success, spurring productive AI developments around the world. Chinese technology companies have also intensified their efforts to come up with a local alternative to ChatGPT, which is not officially available in the Asian country.
In the past 18 months, major Chinese technology companies, including Alibaba, Baidu, Tencent, JD.com, Huawei, and ByteDance, have launched large language models of their own as they seek to capitalize on the hype surrounding AI technology.
For these technology companies, price cuts and promotions have become one of the ways to attract users to this harsh industry. As for Alibaba, this is not the first time it has reduced prices to encourage companies to use its products, as the company implemented another price reduction of up to 55% on a wide range of artificial intelligence products in February.
Alibaba implemented another price cut in May on its Qwen AI model by up to 97% to boost demand for the service.
Big Language Models are AI models trained on massive amounts of data to create human responses to user queries and prompts. These models are the basis for current generative AI systems like OpenAI’s ChatGPT.
According to CNBC, Alibaba’s big language model efforts are primarily focused on the enterprise sector rather than consumer AI chatbots like ChatGPT. Alibaba revealed in May that its Qwen model is already being used by more than 90,000 businesses. Lowering prices could open more doors for wider adoption.
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