Alibaba’s Cloud Business Gets Qwen-ched!
Chinese tech-giant Alibaba is desperately trying to save its cloud business with large language models (LLMs). After releasing Qwen-7B in October, Alibaba recently released Qwen-72B, which has been trained on high-quality data consisting of 3T tokens. Compared to the previous versions, this has a larger parameter size and also an expanded context window length of 32K, with more customisation capabilities. Not just that, the company also added a smaller language model, Qwen-1.8B, touting it as a gift to the research community. It has a 2k context length and requires only 3GB of GPU memory. Both of the models would be available on Alibaba cloud for its customers and also as open source. Besides Alibaba, its competitors Tencent, Huawei, and Baidu are also building LLMs and are attracting customers and generating revenue rapidly. For example, as reported in July, Baidu’s AI cloud is leading the China market for the fourth year in a row, reporting a 69.7% growth in 2022. The company also released its Ernie Bot, competing with GPT-4. Same is the case with Tencent and Huawei. On the contrary, Alibaba’s cloud plans are crumbling. Qwen-ching GPT-4? Alibaba’s cloud unit’s growth has also decelerated, experiencing only a 4% annual revenue increase in the last fiscal, down from 23% growth in the previous year, and 50% before that. Despite Alibaba’s emphasis on the potential of AI software in China benefiting the cloud unit, the recent challenges, leadership changes, and US export restrictions on semiconductor chips have posed significant hurdles. According to reports, the company faces challenges as Chinese businesses, especially in traditional industries, and not the internet driven companies, show little enthusiasm for paying for public cloud services. Internal conflicts arose between Alibaba Cloud and the e-commerce business over post-spinoff terms, leading to a downfall of customers as well. Several months ago, Alibaba executives attempted to convince major investors to invest in its cloud unit, planning to spin it off as a separate company, called Cloud Intelligence Group, with a $40 billion valuation. However, the plan failed as investors were hesitant due to the cloud business’s slow growth and financial losses. The attempt highlighted the market’s reluctance towards the spun-off cloud unit, contributing to Alibaba’s recent decision to cancel the move. This cancellation led to a shed of around $21 billion in its market value, according to several calculations. Alibaba said that these curbs have “created uncertainties for the prospects of Cloud Intelligence Group,” making it difficult to compete with AWS, Microsoft Azure, and Google Cloud, if not just the Chinese counterparts. “Instead, we will focus on developing a sustainable growth model based on emerging AI-driven demand for networked and highly scaled cloud computing services,” Joe Tsai, CEO of Alibaba, said on the company’s investor call in November. The drop also highlights how this is an effect of the geopolitical tensions between US and China. Alibaba had to cancel its spin off plans because the US was controlling the chip exports to China, creating uncertainty for the company, but possibly the introduction of LLMs in its cloud might be able to save the company, just like Baidu, Huawei, and Tencent. Emad Mostaque, the founder of Stability AI, recently posted on X, “Chinese open models will overtake GPT-4 shortly zero shot, can already overtake if you chain Qwen & Deepseek appropriately.” Will test the new Qwen, local open source AI model soon.“A LLM family built by Alibaba Cloud. In this organization, we continuously release LLMs, large multimodal models, and other AGI-related projects”China is blasting through US AI regulations. https://t.co/ue6J7Tyvd6— Brian Roemmele (@BrianRoemmele) November 30, 2023 Competitions galore The restrictions on the chip export, especially the ones NVIDIA makes, is creating a lot of challenges for cloud providers in China. But Alibaba appears to be more significantly impacted by it than its counterparts. Currently, Alibaba still holds a larger market share. But the competitors are increasingly rising up, and Alibaba is shaking grounds and is desperately trying to stay afloat by introducing new LLMs for its customers. For example, Tencent, which stated that its ample chip reserves will sustain its LLM development for several more generations, and Baidu, which mentioned a substantial reserve of AI chips supporting the ongoing chatbot enhancements for “at least a couple more generations.” Alibaba did not make a comparable statement. Tencent also slashed the price of its cloud services by 40% to compete with Alibaba. It also said that the revenue has been growing since the second half of the year. Huawei recorded a 3.1% increase in revenue in the first half of the year compared to previous year. It also reported an increase in overseas exports during the period. Most recently, at the Huawei Cloud Industry Summit Forum 2023, the company announced the industry’s first large model hybrid cloud, enabling both edge and public cloud, providing customers a suite of tools. This was after the company released Pangu 3.0 to compete with ChatGPT in August. While the competitors are rising in the cloud business by offering AI services to their customers, Alibaba is on a downslide. Possibly, the integration of LLM might be able to save the company.
Alibaba’s latest Qwen model can save its failing cloud business.
Chinese tech-giant Alibaba is desperately trying to save its cloud business with LLMs and the new Qwen AI model might help it.
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Mohit writes about AI in simple, explainable, and often funny words. He's especially passionate about chatting with those building AI for Bharat, with the occasional detour into AGI.