Wow, what a big room. Bonjour! Are you enjoying today?
Okay, now you will have a great, great, great session. Joe from Alibaba with Christoph Jacobiz from VivaTech. As you know, VivaTech is a worldwide platform and we are pleased to welcome more than 170 countries. When you walk through the halls, you will see a lot of pavilions from countries and a lot of nationalities. We hear a lot about our friends from the US, from Europe, of course, but too often we tend to forget the other half of the world. And that's why our next guest is here. He co-founded Alibaba. People do not know his name very well, but they will remember it forever because he has helped transform Alibaba. And Alibaba has created Qwen, which is the most widely used open source AI model in the world. Not a chip, not cloud—it is Qwen. Alibaba released its latest version of Qwen a few months ago. We are pleased to welcome someone who has been at the helm of the company since its inception and who was the man behind the open source movement in AI. So please welcome very warmly Christoph Jacobiz from VivaTech, and a big round of applause for Joe Tsai, chairman and co-founder of Alibaba.
Joe, welcome. Hello everyone, thank you for being here. We're very, very pleased, as Maurice said, to welcome Joe Tsai, the co-founder and chairman of Alibaba. Alibaba went through many revolutions, and of course we'll speak about the last one—the open source LLM model. But first, can we talk about your history? Because many people in France still think you are a marketplace—B2B, B2C. We know AliExpress here. I know you have the largest marketplace in China. So could you tell us more about the evolution of your company, of your group?
Yeah, thanks Christoph, thanks Maurice. It's great to be here. Alibaba started in 1999 as a B2B marketplace, and at the time the business idea was very simple. We put small Chinese manufacturers and trading companies online to sell to the whole world wholesale. That was on the cusp of China entering the WTO, so the export business was about to boom. Then we got into the consumer B2C business and launched a website called Taobao, which today is the largest consumer e-commerce business in China.
We serve 820 million Chinese consumers. And by the way, this platform helps European companies and brands sell 30 billion euros to Chinese consumers every year. So Alibaba is quite important for European companies doing business around the world. We went big into AI and cloud, and this is actually quite a long history. We've been investing in cloud technology for 17 years, and that's because of necessity. We were managing so much data from our e-commerce business and transactions on a daily basis that if we continued to be dependent on other people's technology—database and storage—we would end up giving all of our profits to the technology providers. So we developed our own proprietary technology, and that's when our cloud business was born. We basically ate our own dog food before launching the service to third-party customers. From a macro perspective, we're all in on AI. The logic is simple: AI is producing units of human intelligence and human productivity. If you look at global GDP—over a hundred trillion dollars—at least half, 50 trillion dollars, is about human productivity and intelligence. That is the total addressable market of AI, and that's why we're all in.
So you think AI will really make us have higher productivity? Because we just had a round table about an hour ago where we were questioning whether people are investing a lot but not seeing the results yet.
They don't see the results yet. A lot of corporate CEOs will tell you that their engineers are burning a lot of tokens and costs go up. But I think we're at the cusp of real productivity gains. Right now a lot of people are experimenting. We see it in our own company—there are super users who use coding tools and they're not just doing work within their domain, they're experimenting with other stuff. When you give engineers toys, they will always play with it more than you expect, and they don't realize the company is actually paying for it. But I truly believe this is a question of whether production of artificial units of intelligence will be able to add value to human intelligence. It's like religion—I don't want to convince all of you that it's going to happen, but we believe it will.
So if we go back to the Alibaba evolution, in which layer of AI do you invest most? Is it infrastructure, models, cloud services?
We are in at least four layers of AI. At the bottom, we're not involved in energy—in the China context energy is actually very efficient and less expensive, and the Chinese government has invested heavily in the national grid over the last 15 years. But from the bottom, we're involved in chips, infrastructure through our cloud business, and the model—our Qwen model is one of the most popular open source models in the world. And at the application layer, we have an e-commerce ecosystem: online shopping, grocery delivery, travel, maps—all where we can infuse and deploy AI for our users. We're involved in all those layers, and we think there are huge benefits to the full stack approach as opposed to just taking one layer. Over time, nobody can tell you where the value will accrue—is it in chips, cloud, or the model? Right now pure model companies are very hot and seem to accrue a lot of the value, but over time that may not be the case. Having an integrated approach makes a lot of sense to us, and that's our core strategy.
That's very interesting. You're right, we don't really know where the value will be. But when you see the investment in infrastructure for AI, do you think there is kind of a bubble? Do we really need all that capacity, because some models are more efficient than others and need less?
I don't think so. The numbers are astounding—if you look at the American hyperscalers, four or five companies combined will invest over $800 billion of capex, and next year it's going to go to over a trillion dollars. It's eyepopping. It's natural that people will ask whether there will be overcapacity. But like I said, we're trying to tackle a total addressable market of 50 trillion US dollars, and that's why we're optimistic. In the China context, we're actually very underinvested in infrastructure and in the supply chain of AI. It behooves all the companies in China to step up their investment. We're not investing at the same level as the American hyperscalers, but it is still very substantial.
Well, sometimes you're limited by your capital, by the free cash flow you're generating. The lucky thing is Alibaba is one of the very few companies that actually has a core business—e-commerce. We generate $25 billion of free cash flow every year from our e-commerce business that can fuel our investments in AI. We're actually one of the better positioned companies out there.
I think today your business in marketplace is still 80, 85% of your total?
Yeah, it is still 80-plus percent of our revenues from the e-commerce marketplace. We're very lucky that that generates a cash flow that allows us to make future investments to invest in AI and cloud business. Yes, absolutely.
What about the Qwen model? Because it's open source now—what kind of customers can you have and how can you help them?
