Alibaba Cloud, the cloud computing arm of Alibaba Group Holding, has given users of its visual reasoning artificial intelligence (AI) model a new year’s gift by cutting prices up to 85 per cent,as price wars continue to rage in China’s domestic AI services market.
The announcement, coming on the last day of 2024, marks the third AI price cut by Alibaba Cloud this year, and comes on the heels of similar moves by TikTok parent ByteDance, as China’s Big Tech firms try to woo users in a crowded market.
Alibaba owns the South China Morning Post.The cost for using Qwen-vl-max, Alibaba Cloud’s most advanced visual model, has been cut to 0.003 yuan (US$0.00041) per thousand input token uses, according to the new pricing.The adjustment will position Qwen-vl-max as a direct competitor to a similar visual model that ByteDance launched in the middle of the month in terms of cost, underscoring the intense rivalry in China’s AI market.
ByteDance introduced a new model with “visual understanding” capabilities at a corporate event earlier this month. The pricing level of 0.003 yuan per thousand token users was 85 per cent lower than the industry average, Tan Dai, president of ByteDance’s Volcano Engine cloud unit, said at the time.
Tokens are the standard billing units for using AI models through an application programming interface.
The moves by ByteDance and Alibaba to further reduce prices for some of their most capable AI models is likely to kick off a fresh round of price cuts in a market that is saturated with similar offerings. As of November, Chinese regulators had approved a total of 252 generative AI services for public use, prompting companies to offer products at lower prices to attract customers and encourage adoption.
Beyond price cuts from firms such as Alibaba, ByteDance and search engine and AI pioneer Baidu, well-funded start-ups including Zhipu AI and DeepSeek have joined the fray, offering their services at deeply discounted prices, with a few even offering a tier that gives users free access to basic and pared-down services earlier this year.
TikTok owner ByteDance was China’s biggest investor in technologies including artificial intelligence (AI) in 2024, with its outlay almost matching the combined spending of rivals Baidu, Alibaba Group Holding and Tencent Holdings, according to new research.Beijing-based ByteDance, founded by Chinese entrepreneur Zhang Yiming, invested an estimated 80 billion yuan (US$11 billion) on capital expenditure during the year – including AI – while Baidu, Alibaba and Tencent’s spent about 100 billion yuan among them, according to a research note issued by Zheshang Securities’ analysts Liu Wenshu, Tong Fei and Ye Guangliang.
ByteDance, which generates strong cash flow from Douyin, the Chinese version of TikTok, is expected to double its capital spending to 160 billion yuan in 2025, including 90 billion yuan for computing power and the rest for infrastructure such as internet data centres, according to the report, which did not break out how much was specifically spent on AI.
China’s Big Tech firms are accelerating their spending on tech like AI, but remains behind their deep-pocketed US peers.
ByteDance’s US$11 billion in capex is still well below the US$44.5 billion spent by Microsoft alone, according to the research note.
ByteDance’ large expenditure seems to have delivered results. The company’s AI chatbot Doubao is on par with OpenAI’s GPT-4o based on indicators such as reasoning, coding, ability to follow instructions, and overall ability, according to the Zheshang Securities note.
Meanwhile, the new underlying model for Doubao, introduced this month, costs 0.003 yuan (US$0.00041) per thousand token uses, compared to 0.0175 yuan for ChatGPT, according to figures provided by ByteDance and quoted by the securities analysts. ChatGPT is not officially available in China.
Zheshang Securities also believes ByteDance’s massive spending on computing power will drive progress in China’s AI industry.The report said ByteDance has also invested heavily in promoting its AI products, with advertising spending for Doubao surging to 124 million yuan in the first 10 days of June, up from nearly 18 million yuan for the two month period of April and May.
Shi Yuxiang is eager to find out what the latest artificial intelligence (AI) technology has to offer in video-making.
But with OpenAI’s long-awaited Sora video generation tool launching only earlier this month, the 34-year-old entertainment industry professional from Beijing has been experimenting with a wide range of Chinese alternatives.
“Whenever there’s a new product release, I’ll give it a try,” Shi said.
If a certain tool impressed him, he would pay for a subscription.Shi is among the many tech-savvy Chinese users spoiled by a bevy of home-grown generative AI (GenAI) services, as tech giants and cash-flush start-ups battle for customers in a fast-growing market. As of November, regulators had approved 252 GenAI services for public release in the country.
