Chinese tech giant Alibaba has introduced a new version of its artificial intelligence model, Qwen 2.5, claiming it outperforms DeepSeek-V3, one of the most advanced AI models currently available.
A Strategic Timing for Release
Alibaba surprised many by launching Qwen 2.5-Max on the first day of the Lunar New Year, a time when most people in China are on holiday.
This unusual timing signals the growing competition in China’s AI industry, especially following DeepSeek’s rapid rise over the past few weeks.
In a post on its official WeChat account, Alibaba’s cloud division stated that Qwen 2.5-Max performs better than OpenAI’s GPT-4o, DeepSeek-V3, and Meta’s Llama-3.1-405B in almost every category.
DeepSeek’s Impact on the AI Industry
DeepSeek has been making waves since launching its AI assistant on January 10, powered by the DeepSeek-V3 model.
Just ten days later, it introduced the R1 model, which shocked the tech world and caused a drop in AI-related stock prices.
The main reason?
DeepSeek’s technology is not only advanced but also far more affordable than its U.S. competitors, making investors question the massive budgets AI firms in Silicon Valley have been spending.
DeepSeek’s rapid success has put pressure on other Chinese AI companies to step up their game.
Just two days after the release of DeepSeek-R1, ByteDance—the company behind TikTok, announced an upgrade to its AI model.
ByteDance even claimed its model outperformed OpenAI’s o1 in AIME, a benchmark that evaluates how well AI understands and responds to complex instructions.
Price Wars in China’s AI Market
DeepSeek is no stranger to disrupting the industry. When it launched its previous AI model, DeepSeek-V2, in May last year, it sparked a price war in China.
The model was open-source and extremely cheap, charging only 1 yuan ($0.14) per 1 million tokens (units of data processed by the AI).
This forced Alibaba to slash its AI model prices by up to 97%, with other tech giants like Baidu and Tencent following suit.
DeepSeek’s Unique Approach
Despite the ongoing price competition, DeepSeek’s founder, Liang Wenfeng, has remained focused on a bigger goal: achieving AGI (Artificial General Intelligence).
In a rare interview last July, he stated that DeepSeek is not concerned with price wars and instead prioritizes innovation.
Unlike Alibaba and other massive corporations with thousands of employees, DeepSeek operates more like a research lab.
Most of its team consists of young graduates and PhD students from top Chinese universities.
Liang has expressed skepticism about whether big tech companies, with their high costs and rigid structures, are truly suited for the future of AI.
He believes that continued innovation is key and that even tech giants have their limits.
As the AI race heats up, it remains to be seen how companies like Alibaba, DeepSeek, and ByteDance will push the boundaries of artificial intelligence in China and beyond.
