Alibaba’s AI Strikes Back! Qwen 2.5-Max Challenges DeepSeek
BEIJING, 29th January 2025 – Alibaba has released Qwen 2.5-Max, its new AI model, saying it beats DeepSeek-V3, OpenAI’s GPT-4o and Meta’s Llama-3.1-405B. The timing of the release, on the first day of the Lunar New Year, shows the growing sense of urgency in China’s AI competition as Alibaba tries to catch up with DeepSeek’s meteoric rise.
DeepSeek, a Chinese AI startup, has been shaking the industry with its cost-effective and high-performing AI models, challenging not just domestic rivals but also Silicon Valley giants. The release of its DeepSeek-V3 and R1 models in January 2025 sent shockwaves and made everyone worried about the huge spending plans of OpenAI and other US AI companies.
A Price War?
Unlike the others that have spent thousands of dollars in developing AI chips, DeepSeek’s models are working on extremely cheap chips in comparison. They are cheaper to develop and deploy. Its DeepSeek-V2 model released in May 2023 sold for 1 yuan ($0.14) per 1 million tokens and now Alibaba has reduced its AI services by as much as 97%.
Baidu and Tencent soon followed, and this AI price war is only getting fiercer. As AI models of DeepSeek are inexpensive and efficient, even US tech stocks got hit, and investors are worried about the future of AI profitability.
DeepSeek runs like a light research lab: mostly young PhDs from China’s top universities, quite unlike Alibaba’s corporate structure, which has hundreds of thousands of employees.
China’s Race for AGI
Liang Wenfeng, DeepSeek’s reclusive founder, famously declared that big tech firms can’t keep pace with innovation in AI; he revealed the ultimate goal: Artificial General Intelligence, or AGI.
Meanwhile, ByteDance (the parent company of TikTok) is also ramping up AI efforts. Just two days after DeepSeek-R1’s release, ByteDance introduced an AI model update that it claims beats OpenAI’s GPT-4 in benchmark tests.
On the strength of Alibaba’s Qwen 2.5-Max, the competition among Chinese AI leaders is fiercer than ever. As AI innovation accelerates and costs plunge, a significant shift in the global tech power balance may be recorded, which will signal severe competition against the traditional U.S. monopoly.
Will it be DeepSeek with low-cost disruption winning the battle or Alibaba with scale and resources at its back? The battle of AI has just begun.
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