Alibaba refutes $1 billion DeepSeek investment claim

Chinese e-commerce giant Alibaba has refuted claims that it plans to invest in DeepSeek. Earlier on Friday, Chinese media outlets reported that the company plans to invest a whopping $1 billion into the open-source AI model.

Yan Qiao, a vice president at Alibaba, addressed the matter directly on her WeChat moments feed where she refuted the claims thereby emphasizing they were false.

While acknowledging DeepSeek as a fellow Chinese and Hangzhou-based company, the executive dismissed the circulating news despite extending praise to DeepSeek’s achievements.

“As a fellow Chinese and Hangzhou company, we applaud DeepSeek, but news circulating that Alibaba will invest in DeepSeek is fake news,” she expressed.

Recall that amidst DeepSeek’s wave, Alibaba recently released a new version of its Qwen 2.5 artificial intelligence (AI) model. The e-commerce company said the new AI model will outperform the highly acclaimed DeepSeek-V3, OpenAI, and Meta’s open-source AI models.

Qwen 2.5-Max’s release occurred on the first day of the Lunar New Year when most Chinese people are off work and with their families.

On another end, industry analysts believe that Alibaba’s announcement reflects the pressure that Chinese startup, DeepSeek’s emergence is having on global rivals and domestic competition.

“The Jan. 10 release of DeepSeek’s AI assistant, powered by the DeepSeek-V3 model, as well as the Jan. 20 release of its R1 model, has shocked Silicon Valley and caused tech shares to plunge, with the Chinese startup’s purportedly low development and usage costs prompting investors to question huge spending plans by leading AI firms in the United States,” an expert explained. 

DeepSeek-V2 was released in May 2024 and quickly disrupted the Chinese AI market due to its aggressively low pricing. As a result, major Chinese tech companies such as ByteDance, Tencent, Baidu, and Alibaba have been compelled to lower their pricing structures in response to DeepSeek’s strategy.

E-commerce company, Alibaba started investing in the AI industry over a decade ago and launched its AI research division in 2017. Since then, the company has gone on to integrate a variety of AI tools into its operations.

Last year, senior executive Kaifu Zhang revealed that the company was tapping into generative AI-powered tools to accelerate its e-commerce business by supporting cross-border merchants via content creation, translation, and product returns.

Also Read: American state of Texas bans DeepSeek and other Chinese apps.

Alibaba’s performance under DeepSeek’s wave

DeepSeek recently shocked the AI market after making claims its AI model cost a fraction of what leading players in the industry spent on training. Several leading tech players stumbled upon the development. 

Microsoft Corporation, a major investor in OpenAI, saw its stock fall by more than 8 per ent, while Nvidia, the leading manufacturer of AI chips, has seen its shares fall by more than 20 per cent. Although the chip maker acknowledged DeepSeek’s R1 model and its vast functionality. 

However, one of the few tech stocks not adversely affected by the DeepSeek announcement is Alibaba Group Holding, which is leveraging AI to boost its cloud services business.

The company’s shares are up more than 16 per cent this year and have risen nearly 10 per cent since DeepSeek’s surge. 

Dark days for DeepSeek

Meanwhile, the initial enthusiasm that greeted DeepSeek has now been replaced with suspicions of data leakage, fraud, and other information security concerns. 

The app, downloaded at least 16 million times worldwide and the most downloaded app in 140 countries, has experienced a series of bans. On Thursday, the American State of Texas became the latest government to ban the Chinese open-source AI model. 

DeepSeek

Texas Governor Greg Abbott, who raised data privacy and national security concerns in a proclamation on the Texas state website, prohibited state workers from interacting with Chinese AI and social media apps, including DeepSeek, RedNote, and Lemon8, on state-owned devices. 

“Texas will not allow the Chinese Communist Party to infiltrate our state’s critical infrastructure through data-harvesting AI and social media apps. Texas will continue to protect and defend our state from hostile foreign actors,” Governor Abbott said.

Such as the American State of Texas, which is the first state to ban the open-source AI chatbot in the U.S., Italy, Taiwan, the U.S. Navy, Congress, the Pentagon, the Finance Ministry, and NASA have also banned the use of the AI app, all similarly citing privacy and security concerns.

Australia has also restricted the app from being used. Some other countries are currently weighing the risks of keeping DeepSeek legal, including the UK, Ireland, some EU members, and South Korea.

The biggest worry reportedly is potential data leakage to the Chinese government. According to DeepSeek’s privacy policy, the company stores all user data in China, where local laws mandate organizations to share data with intelligence officials upon request. TikTok, a Chinese ByteDance subsidiary, faces the same security concern across several countries.