Chinese tech giant Alibaba launched its latest AI model, Qwen 2.5-Max. The company claims that this new version outperforms DeepSeek’s highly praised V3 model. A Reuters’ report highlights the unusual timing of the launch – first day of the Lunar New Year- a holiday when many people in China are off work. This highlights the urgency Alibaba felt in responding to DeepSeek’s increasing popularity.
What is DeepSeek and what it can do?
DeepSeek is an AI chatbot developed by a Chinese startup that has quickly become a key player in the field of artificial intelligence. Unlike other AI systems that rely on costly and advanced hardware, DeepSeek’s chatbot uses more affordable chips, making it a low-cost but highly efficient option. It’s capable of understanding and responding to complex queries, much like other advanced chatbots, but at a fraction of the price.
DeepSeek’s impact on the AI industry
DeepSeek, a Chinese AI startup, has made waves in the tech world, especially with the launch of its DeepSeek-V3 and R1 models. These releases have shocked major players like OpenAI and Meta, especially because of DeepSeek’s ability to offer impressive AI technology at much lower costs. The cost-effectiveness of DeepSeek’s models has raised concerns among investors about the high spending plans of large AI companies in the US.
Domestic competition heats up
DeepSeek’s success has triggered a rush among Chinese companies to enhance their AI offerings. After DeepSeek’s R1 model debuted on January 20, ByteDance (the parent company of TikTok) quickly released an updated version of its AI model. ByteDance claimed its new version outperformed OpenAI’s GPT-4 in a key benchmark test. This shows how DeepSeek’s rise is influencing competition not just internationally, but also within China.
The price war sparked by DeepSeek
One of the main factors behind DeepSeek’s success is its ability to offer AI models at extremely low prices. For example, the DeepSeek-V2 model, released in May 2023, was open-source and priced at just 1 yuan ($0.14) per 1 million tokens, which led Alibaba to slash prices on its own models by up to 97%. Other Chinese tech giants like Baidu and Tencent followed suit with price cuts and updates to their AI technologies.
With DeepSeek’s rise and Alibaba’s response, the competition within the Chinese AI market has intensified. As companies race to develop better, cheaper, and more powerful AI models, the market will likely continue to evolve rapidly. DeepSeek’s focus on AGI could push the boundaries of AI even further, challenging not just Chinese firms but global tech companies as well.
