Alibaba Group Holding Limited (NYSE:BABA) Q1 2024 Earnings Call Transcript

Thank you. Just to add one more point, which is when we talk about this ecosystem, and we strongly believe in this AI new era, there is a new ecosystem is incubating. So that’s why we do a lot to grow our model, our community model scope to make sure all the relevant models, all the good models in the market, not only from Alibaba, vast, vast majority of them are from ecosystem to make all the models available for the developers, for the industry partners, and we provide tools, applications to help them to use these models and a lot of open source models, as I said in my script. And from our side, we are also we’ll continue our efforts to upgrade our model and also continue our open source strategy for the models. And the more people use models, then the more people will use computing power.

That’s the short answer.

Operator: Thank you. Your next question comes from Jiong Shao with Barclays. Your line is open.

Jiong Shao: I have a follow-up question for Daniel regarding AI. We know that Alibaba has launched its tiny model and has recently opened up two additional models and you’re also hosting model from Meta. I’m wondering if we think about the future landscape in China, say, three to five years down the road, what that landscape will look like, how many foundational models will have proven successful what will the mix look like as between proprietary versus open source models at that time? And what will be the factors that will contribute to the success or failure of these different competitors in that period.

Daniel Zhang: Well, that’s an excellent set of questions, and it’s difficult to answer as they are excellent. We’re standing at the advent of a new era, an unprecedented new era where things are moving so fast that most people look at things in intervals of one month and track changes month by month. So it’s extremely difficult to talk about what the future will be like three to five years out. Perhaps I can share with you my own observation and thinking about some of those larger issues. Certainly, there are quite a lot of companies in China already today that are working on large language models. I think there are basically two development pathways available to these companies, broadly speaking. One is the one that Alibaba has chosen because we are a cloud provider.

So, we developed these large language models. And as we evolve them, we continue to open them up, make them available, even go open source with them to get more people to use them. So we’re providing foundational models are intended to be a universal application to benefit the broadest swath of the community, making them available to developers to develop applications, building on them. But at the same time, there will also be some players in this market who although they’re starting out, developing foundational models, we’ll very quickly start to focus on a few particular domains where they have expertise. Of course, these will be domains where to succeed, they’ll need to have a lot of high-quality data as well as deep insight into that data.

But some companies will start by developing those additional models, but quickly move into developing specific applications. So that’s foreseeable. Of course, this in that second category, I spoke about, might say today that they’re working on big models or large language models. But in point of fact, they’ll end up working on vertical models. But it’s difficult to know today and to distinguish between the two. But another important point I would add on is that AI is not valuable, just by virtue being AI. In fact, it has tremendous potential to revolutionize all the existing applications and services that are out there across industries and sectors, including both 2c and 2b. So if you look at all the different applications and services that exist today on the Internet, all of them can be rethought and revitalized and upgraded with AI.