ByteDance and Alibaba plan to release next-generation AI models (such as DouBao 2.0 and Qwen 3.5) during the Lunar New Year holiday, marking a fierce competition for dominance in China’s AI application market. This battle will not only have a huge impact on who can create the most popular consumer AI super apps, but also on the state of China’s AI cloud market, which is expected to reach nearly $90 billion in the next few years.
Chinese tech giants ByteDance and Alibaba (BABA.US) are preparing to launch a new generation of artificial intelligence models during the upcoming Lunar New Year period, signaling an intensification of competition between the two companies for China’s AI leadership and future dominance in the cloud market.
Sources said ByteDance plans to release three new models next month covering large-scale language models, image generation and video generation, aiming to leverage its fast-growing cloud services business to challenge Alibaba’s market position. The timing of this release is set for mid-February during the Chinese New Year holiday and aims to take advantage of this important user traffic window.
Alibaba is similarly determined, with insiders revealing that it plans to launch its flagship model, Qwen 3.5, with strong mathematical and coding capabilities around the same time. Additionally, Alibaba is planning a large-scale holiday marketing campaign for its consumer-facing Qwen AI application and intends to directly challenge DouBao, the chatbot with the largest user base currently. The standoff comes at a time when competitors such as DeepSeek are also planning to release new models, highlighting the urgent need for Chinese tech companies to develop AI super apps that capture the attention of users.
This competition will not only see who can create the most popular AI consumer applications in China, but will also determine the future prospects of China’s AI cloud market over the next few years. JPMorgan predicts the market will reach nearly $90 billion by 2030.
Multimodal product matrix
According to sources, ByteDance is preparing to release certain products, including its new flagship large-scale language model “DouBao 2.0,” image generation model “Seedream 5.0,” and video generation model “SeedDance 2.0.”
Meanwhile, Alibaba’s planned Qwen 3.5 flagship model is optimized for complex inference tasks. Previously, The Information reported that DeepSeek is planning to release its next major model around the same time after a one-year hiatus. During last Chinese New Year, DeepSeek gained global attention through its news and entertainment content as most users had plenty of screen time during the holiday. This year, both ByteDance and Alibaba are clearly planning to take advantage of this same window period to make their AI applications the most popular among Chinese consumers.
The battle for super apps
When it comes to chatbot applications, ByteDance has a slight edge at the moment. As of last month, the company’s DouBao application had 163 million monthly active users, according to data from Aicpb.com, a Chinese website that tracks AI products. ByteDance has integrated the DouBao chatbot into its short video app Douyin.
Meanwhile, Alibaba is aggressively fighting back. Last November, the company released the Qwen app, an improved version of its Tongyi chatbot powered by the latest Qwen 3.0 model. Earlier this month, Alibaba announced major upgrades to Qwen that will integrate with its e-commerce platform, online travel services, and affiliate company Ant Group’s payments platform, with the aim of turning the chatbot into an all-purpose agent that can assist users with real-world tasks such as ordering food online or booking travel.
The Qwen app is at the core of Alibaba’s AI strategy, with the company’s internal goal of completing the integration of all Alibaba ecosystem services and apps by the first half of 2026, according to an Alibaba employee familiar with the plans. Currently, the Qwen app has over 100 million monthly active users. ByteDance and Alibaba declined to comment on this matter.
Full modal vision and cloud market
In addition to the upcoming models, both ByteDance and Alibaba are working on an ambitious long-term project aimed at developing integrated AI models that can not only process text, images, audio, video, and code, but also seamlessly generate them, according to three sources who spoke to the media.
The outcome of this technology race will have a direct impact on how AI is used in China’s daily activities in the coming years. The winners are also expected to dominate the lucrative AI cloud market.
Tencent and other competitors catch up
Other small startups in China are also developing competitive AI models. In addition to DeepSeek, MoonShot, another leading language modeling startup, released a new model earlier this month called Kim K2.5 that excels in coding and visual data understanding. However, unlike ByteDance and Alibaba, these emerging competitors do not have their own cloud platforms or large user bases to fund model development.
In China, the only giant company with the resources to simultaneously challenge ByteDance and Alibaba in the AI race is Tencent, the WeChat messaging app with more than 1.4 billion monthly active users.
Tencent has accelerated its efforts in recent months, reorganizing its AI team under the leadership of new chief AI scientist Yao Shunyu, who joined from OpenAI in September. Two Tencent employees who attended the company’s annual employee meeting earlier this week said that during the meeting, CEO Ma Huateng acknowledged that the company had moved too slowly, but stressed that the company was building a stronger AI team.
Editor/KOKO
