Alibaba released an updated version of its Qwen 2.5 AI model on Wednesday, claiming it outperforms DeepSeek-V3, a highly regarded competitor.
The timing of this release, coinciding with the start of the Lunar New Year, suggests the growing competition in China’s AI sector.
China’s AI model, DeepSeek is a rising startup that has gained significant attention in recent weeks, putting pressure on both global and domestic AI firms.
Alibaba’s cloud division stated that Qwen 2.5-Max surpasses OpenAI’s GPT-4o, DeepSeek-V3, and Meta’s Llama-3.1-405B in multiple performance areas.
DeepSeek’s Rapid Rise Shakes the Industry
DeepSeek’s AI assistant, launched on January 10, and its R1 model, released on January 20, have disrupted the market, leading to stock price drops in Silicon Valley.
The company’s low-cost AI models have forced investors to reconsider the heavy spending by major U.S. firms.
DeepSeek’s success has also pushed Chinese competitors to improve their own models.
ByteDance, the owner of TikTok, updated its flagship AI model two days after DeepSeek-R1’s release, claiming it performed better than OpenAI’s o1 on a key AI performance test.
Price Wars and the Future of AI in China
DeepSeek’s previous model, DeepSeek-V2, launched last May, sparked a price war in China’s AI market.
Its low cost—just 1 yuan ($0.14) per million tokens—prompted Alibaba to slash its own AI model prices by up to 97%.
DeepSeek’s founder, Liang Wenfeng, has downplayed price wars, stating that the company’s primary focus is achieving artificial general intelligence (AGI).
He has also suggested that large firms like Alibaba may struggle to keep up with AI advancements due to their size and rigid structures.
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