Alibaba (BABA) cloud unit cuts prices on AI models by up to 85%

Alibaba is cutting prices on its large language models by up to 85%, the Chinese tech giant announced on Tuesday.

The cloud computing division of Hangzhou-based e-commerce company Alibaba Cloud said in a WeChat post that it is offering price cuts on its visual language model, Qwen-VL, which is designed to perceive and understand both texts and images.

Alibaba shares did not move much on the announcement, closing 0.5% higher on the final trading day of the year in Hong Kong.

Still, the price cuts show how the race is intensifying among Chinese tech giants to win more business for their nascent artificial intelligence products.

Major Chinese tech companies including Alibaba, Tencent, Baidu, JD.comHuawei and TikTok parent company Bytedance have launched all their major language models in the last 18 months, hoping to capitalize on the hype around the technology.

This is not the first time that Alibaba has announced price cuts to incentivize companies to use its AI products. In February, the company announced price reductions up to 55% on a wide range of core cloud products. More recently, in May, the company reduced prices on its Qwen AI model up to 97% in an attempt to boost demand.

Major language models, or LLM for short, are AI models that are trained on vast amounts of data to generate human responses to user questions and requests. They are the basis for today’s generative AI systems, such as the popular AI chatbot from OpenAI, ChatGPT, the startup backed by Microsoft.

In Alibaba’s case, the company is focusing its LLM efforts on the enterprise segment rather than launching a consumer AI chatbot like OpenAI’s ChatGPT. In May, the company said its Qwen models have been deployed by more than 90,000 enterprise users.