Comparing AI Strategies of Tech Giants: Between Offense and Defense

The trade-off between first-mover advantage and late-mover advantage: A key strategic decision in the field of innovation. First movers can seize market share and establish brand image, but face high risks and uncertainties. Late movers can learn from experience and avoid mistakes, but need to break through existing patterns. Companies should carefully choose a suitable development path based on their own strengths, industry characteristics, and market environment, flexibly seize opportunities to achieve sustainable competitive advantage.

Since ChatGPT's popularity explosion in early 2023, the US stock market's "Magnificent Seven" (Mag7), including Apple, Microsoft, Google, Amazon, Nvidia, Meta, and Tesla, have become the best-performing assets globally. In 2023, Mag7's return rate reached 107%, far exceeding the MSCI US index's 27%. The reason for these tech giants' surge is simple: AI. Each Mag7 company has made extensive AI investments, unwilling to fall behind in the new round of tech reshuffling.

In China, all internet giants have also paid high attention to the sudden emergence of large language models. However, due to different circumstances, their actions in response to the AI wave vary greatly. The current moves of major companies can be roughly divided into two categories: offensive and defensive:

Offensive companies have clear strategic needs for AI and invest more aggressively. Representative companies are Alibaba and ByteDance.

  • Alibaba: With its main e-commerce business under pressure, it can only invest heavily in large language models, seeking breakthroughs in cloud computing. Alibaba is the most aggressive investor in large language models among major companies, having invested in five unicorn companies in this field. It also continues to pursue developing China's leading general-purpose large language model.

  • ByteDance: Although not greatly impacted by AI, it urgently needs to find new entry points in the AI era due to the vulnerability of its content platform entry. ByteDance is the most active in exploring AI applications, launching AI products covering multiple fields.

Defensive companies do not pursue absolute leadership in models and applications but adopt more of a following strategy. Representative companies are Tencent and Meituan.

  • Tencent: It didn't launch its ChatGPT-like product "Tencent Yuanbao" until May 2023, half a year later than other major companies. Tencent products are rarely seen on major AI application rankings. Tencent focuses more on AI implementation in existing scenarios.

  • Meituan: Has not announced any information about self-developed large language models.

Technological changes often present opportunities for industry reshuffling. AI, considered as significant as the Industrial Revolution, will inevitably have a huge impact on the existing mobile internet landscape. Each company's current choices will profoundly affect its position in the next era.

Alibaba is most committed to AI investment because its main e-commerce business is challenged by Pinduoduo and Douyin e-commerce. Alibaba can only be defensive in e-commerce and must rely on cloud computing for growth breakthroughs. The emergence of AI provides an excellent opportunity for Alibaba to focus on cloud computing. Alibaba not only heavily invests in large language model companies but also continues to pursue developing China's leading general-purpose large language model. Alibaba values AI mainly for two reasons:

  1. Hopes to seize the opportunity of large language models to become the AI computing infrastructure.
  2. AI can directly bring more incremental business to cloud computing.

ByteDance has chosen to fully penetrate AI applications. It has been relatively slow in large language models but most aggressive in exploring AI applications. ByteDance's AI applications cover almost all popular tracks, with Douyin and Capcut Dreamina being the most downloaded AI application products. ByteDance is also exploring AI hardware.

ByteDance's emphasis on AI applications and hardware is closely related to its "entry anxiety" in the AI era. ByteDance's traffic ecosystem is entirely built on content, making it relatively vulnerable. Finding new entry points in the AI era has become ByteDance's most urgent task.

In comparison, Tencent has been relatively "laid-back" in AI. Tencent's ChatGPT-like product "Tencent Yuanbao" was launched half a year later than other major companies. Tencent focuses more on AI implementation in existing scenarios, having tested its large language model in over 600 internal businesses and scenarios.

Tencent's actions are related to its judgment on AI industry development. Tencent believes AI development will go through three stages: the first stage is the technological breakthrough of large language models, the second stage is the industrialization of large language models, and the third stage is the deep integration of AI with various industries. Tencent believes we are currently transitioning from the first to the second stage, thus focusing more on industrial applications of AI.

Meituan has been more cautious in AI, not announcing any information about self-developed large language models. Meituan CEO Wang Xing believes that AI's impact on Meituan is mainly reflected in improving efficiency and will not have a disruptive impact on Meituan's core business.

Overall, facing the AI wave, Chinese internet giants have adopted different strategies. Alibaba and ByteDance have chosen to actively attack, hoping to seize opportunities in the new round of technological revolution. Tencent and Meituan have adopted relatively conservative defensive strategies, focusing more on AI applications in existing businesses. Each company's choice will affect its development trajectory in the AI era.