Alibaba Exec Denies Investment Plans in DeepSeek

Alibaba Group Holding Ltd., the Chinese e-commerce giant, has denied reports that it plans to invest in DeepSeek, a Chinese AI startup that has gained significant attention for its low-cost AI models. Yan Qiao, a vice president at Alibaba, took to her personal WeChat moments feed to dismiss the rumors, stating, "as a fellow Chinese and Hangzhou company, we applaud DeepSeek, but news circulating that Alibaba will invest in DeepSeek is fake news."

The denial comes amidst speculation that Alibaba was considering a $1 billion investment in DeepSeek, which would have valued the startup at $2.5 billion. The rumors had been circulating in Chinese media outlets, but Alibaba has maintained that it has no such plans.

DeepSeek has made waves in the AI industry with its open-source model, DeepSeek R1, which was released just one day before OpenAI's $500 billion Stargate project. The company claims to have trained its model for just $6 million using 2,000 Nvidia H800 graphics processing units (GPUs), significantly lower than the $80 million to $100 million cost of GPT-4 and the 16,000 H100 GPUs required for Meta's LLaMA 3. While the comparisons are not apples to apples, the possibilities are valuable to understand.

DeepSeek's rapid adoption underscores its potential impact. Within days of its release, it became the top free app in US app stores, spawned more than 700 open-source derivatives, and was onboarded by Microsoft, AWS, and Nvidia AI platforms. However, the true cost of training the model remains unverified, and there are questions about whether the company relied on a mix of high-end and lower-tier GPUs. Additionally, intellectual property concerns have been raised, particularly regarding the sources and methods used for distillation.

Alibaba's denial of investment plans in DeepSeek has several implications for the perceived value and potential of DeepSeek's AI models in the market. First, it may lead the market to question the true value and potential of DeepSeek's AI models. If Alibaba, a major player in the Chinese tech industry, does not see DeepSeek as a worthy investment, it could cast doubt on the startup's capabilities and the market's perception of its AI models.

Second, Alibaba's denial could potentially impact DeepSeek's stock price, as investors may become more cautious about the company's prospects. This is evident in the case of Nvidia, whose stock price dropped significantly after the news of DeepSeek's low-cost AI models surfaced.

Third, Alibaba's denial could also influence the competitive landscape, as other tech companies may be more inclined to invest in or partner with DeepSeek to gain a competitive edge. This could lead to increased competition in the AI market, driving innovation and potentially benefiting consumers.

Finally, Alibaba's denial could also draw regulatory scrutiny, as it may be seen as an attempt to stifle competition or maintain market dominance. This could lead to further investigations into Alibaba's business practices and potentially impact its operations.

In conclusion, Alibaba's denial of investment plans in DeepSeek has the potential to impact the perceived value and potential of DeepSeek's AI models in the market, as well as the competitive landscape and regulatory environment. However, it is essential to consider the broader context and other factors that may influence these dynamics.