Alibaba’s Vision-Language Model, Qwen-VL, will soon be offered at a significantly reduced price, with a decrease of 85%. This information comes from a WeChat post by Alibaba Cloud, as reported by CNBC. It indicates that the price war over AI models has begun. Not all better models are becoming more expensive; in fact, due to intense competition and lack of differentiation, models are becoming cheaper. This trend is initially visible in China but is also affecting Western markets. Last year, Alibaba repeatedly lowered prices for other models.
In China, similar generative AI models and applications are provided by major tech companies like Alibaba, Tencent, Baidu, JD, Huawei, and Bytedance. Additionally, a specialized AI company called Deepseek offers its AI model at a low cost and as open-source.
Even OpenAI and Google are feeling the cost pressure. Qwen from Alibaba is not a consumer product; it is an AI model for businesses. While the subscription price for ChatGPT remains stable at around 20 euros per month, the costs for accessing AI models have changed at OpenAI, Google, and others. Business-to-business usage costs have decreased, and providers have introduced smaller, more affordable models that are becoming increasingly powerful.
All providers are also working on methods to reduce the high costs of training AI models. This includes techniques like model distillation, where the knowledge of a large model is transferred to a smaller one. The cost pressure is further increased by numerous open-source or freely available models. For example, Meta’s AI family Llama can be used for free. However, Mark Zuckerberg has stated that this is only possible because Meta can subsidize AI development through other means, such as advertising in social networks.
OpenAI is known to be under significant pressure as it relies on investors. The company’s website suggests treating investments as donations. However, OpenAI plans to change its corporate structure from a non-profit to a for-profit company to provide more returns to investors. To achieve this, OpenAI needs to increase its revenue. The company plans to generate more income from models like o1 and o3, which are highlighted for their strong reasoning abilities, meaning they are particularly good at logical thinking. However, there are doubts about this.
The competitive landscape for AI models is rapidly evolving, with companies striving to offer more affordable and efficient solutions. As the demand for AI technology grows, the pressure to innovate and reduce costs will likely continue to shape the industry. The trend of lowering prices and increasing accessibility indicates a shift towards making AI technology more widely available to businesses and developers. This could lead to significant advancements in various fields, as more organizations can leverage AI to enhance their operations and services.
In summary, the AI model market is experiencing a shift towards cost reduction and increased competition. Companies like Alibaba, OpenAI, and Google are adapting to these changes by offering more affordable options and exploring new ways to optimize their models. This trend is likely to benefit businesses and developers by providing more accessible AI technologies, ultimately driving innovation and growth across different sectors.