Two weeks ago, Alibaba Cloud bragged its AI was soaring. Now it's slashing prices

ByteDance added a cheap service and the market followed it down

China's top AI players have made enormous cuts to the price of their services.

Alibaba Cloud confirmed to The Register that it has reduced the price it charges per 1,000 input tokens to its proprietary Qwen LLM, after the South China Morning Post reported the Chinese cloud leader introduced discounts of up to 97 percent.

The Register understands that Alibaba Cloud's motive is to promote the growth of AI applications in China.

Yet just two weeks ago the web giant enthusiastically revealed that Qwen had won over 90,000 customers in the year since its release, and had been downloaded over seven million times from Hugging Face, Github, and other platforms.

Alibaba Cloud CTO Zhou Jingren also talked up the 2.2 million people using Qwen through its DingTalk collaboration suite, and told the world "In China, generative AI is in hot demand."

Now it seems that Alibaba sees a need for deep price cuts to stimulate demand. A lot can change in a couple of weeks.

Whatever Alibaba Cloud's motivations, its discounts were reportedly introduced a day after competitor ByteDance introduced AI services that were vastly cheaper – measured in cost of input tokens – than Alibaba's offerings. The other big player in the Middle Kingdom, Baidu, responded to its rivals' moves by making access to some of its Ernie models entirely free.

Beijing has long made AI adoption across government and industry a policy priority, but there's no indication the Party has told its tech giants to make AI more affordable – it appears these shift are just market forces at work.

China's government may yet step in to redirect the market, as the nation's leaders are notoriously wary of Big Tech driving change they can't predict or control.

AI services certainly have the potential to worry the Party, which works hard to control what its citizens can read or say online and constantly promotes "high quality" services that don't challenge ideological orthodoxies. Beijing also urges tech firms to provide efficient services.

AI hallucinations that produce risqué or politically incorrect content will likely not be tolerated. Nor will apps that confuse users or complicate services.

When China's tech giants misstep, they can be required to undertake "rectifications" – often after being named and shamed for needing to do so.

They therefore have strong incentives to go slow and steady on AI – even as the rest of the world charges ahead. ®

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