- Alibaba has emerged as one of the main investors in artificial intelligence start-ups in China.
- Alibaba offers its credit holders credits to use limited network resources for model training.
- As it looks to profit from its stash of AI processors, Alibaba Cloud has emerged as a major investor.
Alibaba has emerged as one of the main investors in artificial intelligence start-ups in China. Instead of providing traditional cash-for-equity funding, Alibaba offers its credit holders credits to use limited network resources for model training.
The massive Chinese e-commerce company is investing in well-known start-ups Moonshot, Zhipu, MiniMax, and 01.ai in an attempt to mimic Microsoft’s investment in the US leader, OpenAI. All of these startups have been creating localized versions of US apps, such as the avatar chatbot from Character.ai and OpenAI’s ChatGPT.
China’s top AI investor
As the firm looks to reposition itself as an AI innovator, Eddie Yongming Wu, the CEO of Alibaba, has personally overseen investments in the four top AI start-ups over the past year.
The investment blowout comes at a critical juncture for Alibaba, which is attempting to weather growing competition in its primary e-commerce industry from ByteDance and PDD Holdings as well as the disorderly unraveling of its massive reorganization plan. Since 2022, Alibaba’s cloud business has grown at a single-digit rate every quarter due to Beijing’s crackdown on major internet companies.
In China, where cloud resources are limited because of US prohibitions on the export of innovative processors, computing-for-equity proposals are more alluring.
Alibaba’s investment in Moonshot is similar to what Microsoft and Amazon have done, wherein money is given to AI start-ups with the understanding that the models will be trained and executed on Azure and AWS servers, respectively. Alibaba’s financing is different, though, in that the funds are never given to Chinese startups.
Comparing this wave of AI start-ups to the previous phase, which was dominated by surveillance outfits SenseTime and Megvii, shows that China’s main internet businesses, such as Alibaba, Meituan, Xiaohongshu, and Tencent, are playing a disproportionate role in financial support. As it looks to profit from its stash of AI processors, Alibaba Cloud has emerged as a major investor.
