Writer: Shi Yaqiong
Alibaba’s recent moves in the AI sector suggest it may have kicked off an investment frenzy. The new strategy may allow Alibaba to create barriers to other major contenders in the AI race.
Along with its affiliates, Alibaba has recently invested in a number of AI infrastructure and technology firms, including several AI chip makers and facial recognition companies.
For example, this year has seen Alibaba and its affiliates make lots of investment in the field of AI chips: Alibaba Entrepreneurs Fund led Kneron’s more than $10 million A funding round. Ant Financial co-led DeePhi Tech’s $40 million A-plus round, with Samsung Ventures, and Alibaba Group invested in Cambricon’s $100 million A round. All three are well-known companies in the AI space. Additionally, according to Caijing, a business and finance magazine, Alibaba has injected 1.5 billion yuan in AI unicorn SenseTime, which, if true, will be the largest financing deal in the AI sector so far. Prior to this, Ant Financial also invested in Megvii, another renowned AI company focused on facial recognition.
The series of moves by Alibaba lately suggest that it may have kicked off an investment frenzy in the AI space. Normally, if financial investors are particularly optimistic about the growth potential of an emerging market, they may invest in multiple, perhaps rivaling, companies in the same field for fear that they bet on the wrong horse, but for Alibaba, the moves are likely part of its AI strategy.
Both internet giants and big software companies are poised to tap into the future of AI. The fact that they are well-funded, control massive data and have large user bases gives them an intrinsic advantage and makes them the most influential players in the AI race.
At this stage, competition among internet giants has focused on technology, the one thing that will shape the future AI competitive landscape. That means they will likely build their infrastructure and application capabilities through cooperation or investment.
Baidu, Alibaba and Tencent are undoubtedly the three Chinese firms that know the best what AI means to the internet industry. They also boast notable advantage in aspects like data and financial strength. Given that Baidu is currently a notch above in research, Alibaba and Tencent, in a rush to keep up, may try to enhance their competitiveness in certain subsectors by buying into existing players.
Once a company is invested by Alibaba, it may be more difficult for later investors to have a finger in the pie. Kr-Asia has asked two AI companies which Alibaba has invested. Both denied having signed exclusive agreement with the giant. However, Alibaba is a board member at one and has a voting right at the other, which means that receiving investment from Alibaba’s rivals is still a largely unlikely scenario for the two. Moreover, as the investment trend intensifies, companies in the AI sector will have greater bargaining power, forcing Alibaba’s rivals to offer higher prices.