Alibaba co-founder Joe Tsai discusses the company's evolution from an e-commerce giant to a major player in AI, emphasizing their commitment to open-source models like Qwen as a path to technological sovereignty and increased human productivity.
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>> Wow.
What a big room. Bonjour.
Are you enjoying today? Yeah?
Okay, now you will have a great, great,
great session.
Joe Tsai
from Alibaba with Christophe Jakubyszyn
from Les Echos.
As you know, VivaTech is a worldwide platform
platform
and we are pleased to welcome more than
170 countries. And when you walk through
the alleys, you will see a a lot of
pavilion from countries and a lot of nationalities.
nationalities.
We hear a lot about our friends from the
US, from Europe, of course,
but too often
we tend to forget
the other other half of the world and
that's why our next guest is here.
He co-founded Alibaba.
Alibaba.
People do not know very well his name,
but they will remember
forever because he has helped
transforming Alibaba.
And Alibaba has created Quen.
And I'm sure that you don't know,
but Quen is the most widely used open
source model in the world.
The most widely open social
AI model. It's not ChatGPT, it's not
Claude, it is Qwen.
Qwen.
And Alibaba released its latest version
of Qwen a few months ago, and we are
pleased to welcome someone who has been
at the helm of the company since its inception.
inception.
And he was the man behind the
open-source of AI. So, please welcome
very warmly Christophe Jakubyszyn from
Le Wagon
and a big round of applause for Joe
Tsai, chairman and co-founder of Alibaba.
Alibaba. >> [music]
>> Joe,
welcome. Christophe,
>> Hello everyone. [music]
Thank you to be here. We are very, very
pleased to as Maurice said to to welcome
Joe Tsai, the co-founder and the
chairman of Alibaba.
Um Alibaba went through many revolution,
and of course we'll speak about the last
one about the open-source LLM model.
Uh but first, can we
talk about your history? Because um
many people in France still feel things
you are a marketplace, B2B, B2C. We know
AI Express here.
I know you are the largest marketplace
in the in China. So, could you tell us
more about your the evolution of your
company, of your group?
>> Yeah, thanks, Christophe. It's uh
Maurice, it's great to be here. Uh
Uh
so, Alibaba started in 1999 as a B2B
marketplace. And at the time, the
business idea was very simple. We put
these small Chinese manufacturers and
trading companies online to sell to the
whole world wholesale. So, that kind of
was on the cusp of of China entering the
WTO. So, the export business was about
to boom. And then we got into the
consumer B2C
business and launched a website called
Taobao and which today is the largest
e-consumer e-commerce business in China.
>> How many customer?
>> We serve 820 million Chinese consumers.
And by the way, this platform helps
European companies and brands to to sell
30 billion euros to Chinese consumers
every year. So, you would say that
Alibaba is quite important for European
companies doing business around the
world. But you
what we are are went big into AI and
cloud. And this is is actually it's
quite a long history. We've been
investing in cloud technology since 17
years ago. And that's because of necessity.
necessity.
We were seeing that we were managing so
much data from our e-commerce business
and transactions on a daily basis
that we if we continue to be dependent
on other people's technology like
database and storage technology from
others, we would end up giving all of
our profits to the technology providers.
And hence there was an effort to develop
our own proprietary technology to manage
all the data. All right? And and that's
when our cloud business was born.
Basically, we ate our own dog food
before we launched the business to offer
that service to third-party customers.
But I think that that's
sort of from the micro perspective from
macro perspective, We're all in on AI.
Uh it's actually the logic is very
simple. Uh AI is today, if you ask me,
how big is the market, what is the
demand, what is the TAM, total
addressable market, uh I would tell you
that it's much, much bigger than any
anybody's IT budgets. It's much, much
bigger than the software market because
what is AI? AI is producing units of
human intelligence and human
productivity. And if you look at global
GDP over a hundred trillion dollars of
GDP, uh at least half of that, 50
trillion, 50 trillion dollars is about
human productivity and human
intelligence. And that is the TAM of AI,
and that's why we're all in on AI.
>> So So you think AI will really um make
us have a higher productivity because we
we just had like 1 hour ago a round
table where we were questioning that. Uh
We people are investing a lot, but they
don't see the results yet.
>> They don't see the results yet. I think
a a lot of corporate CEOs will tell you
that their engineers are burning a lot
of tokens, costs goes up. Uh but I think
I would say we're at the cusp of uh real
productivity gains. Uh right now a lot
of people are experimenting. And there
are uh definitely like we see it in our
company, our own engineers. There are
super users that uh use the coding tool,
for example, and they are uh not just
doing their work that that's within
their domain, but they're also
experimenting with other stuff because
when you give engineers toys, they will
always play uh
uh
with it more than and and they didn't
realize uh that the company's actually
paying for it, right? So this is what's
happening right now, but I think what
what I truly believe, this is really a
belief of whether, you know, uh
production of artificial units of
intelligence will be able to add value
to human intelligence and um
um
it's like religion. I don't I don't want
to convince all of you that that's going
to happen, but we believe that that's
going to happen.
>> So if we go back to the Alibaba
evolution in which layer of AI do you do
you invest most? Is it infrastructure
models, cloud services?
>> So we are in at least four layers of AI.
At the
at the the bottom we're not involved in
energy because in the China context
energy is actually very efficient, less
expensive, and the Chinese government
has invested over the last 15 years in
the national grid that makes energy
delivery production and delivery very
very efficient to all the users.
But we are at the from the bottom we're
involved in chips,
infrastructure in terms of our cloud
business, and also the model. We we have
as Maurice very uh
you know
you know kindly pointed out that we our
Quen model is actually one of the most
popular open source models in the world.
And then at the application layer we
have an e-commerce ecosystem. We have an
ecosystem for online shopping,
grocery delivery, travel
travel
maps and all of that that can where we
can infuse and deploy AI for our users.
So we're involved in all those stacks
of technology and
we we think that there's huge benefits
to the full stack
approach as opposed to just taking one
layer of the stack because
because
I think over time nobody can tell you
right now where the value will accrue.
Which part of the stack? Is it in chips?
Is it in cloud? Or is it in the model?
Right now the model companies and pure
model companies are very hot. They seem
to accrue uh a lot of the value,
uh but over time that may not be the case.
case.
Uh so, having a integrated approach of
being involved in the full stack uh
makes sense a lot of sense to us, and
that's our core strategy.
>> That's very interesting. You you right,
we don't really know where the value
will be, but uh when you see, you know,
the the investment in infrastructure for
AI, do do you think there is kind of
bubble there? Is it Do Do we have the
all those need to make the model work?
Because some model are more efficient
than others, and they they need less uh
capacity than others. So, what about that?
that?
>> I don't think so. Uh I mean, the numbers
really are quite astounding uh because
if you just look at the American
hyperscalers, the 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 it's it's
eye-popping type of CapEx investment,
and and I think it's natural that people
will ask whether there's going to be overcapacity.
overcapacity.
Uh but again, like I said, we're going
against We're We're trying to tackle a
total addressable market of $50 trillion
US dollars. And that's
uh that's why we're optimistic. And in
the China context, uh we're actually
very underinvested in uh infrastructure
and in the supply chain of AI. Uh and
so, it actually behooves all the
companies in China to step up their
investment. Uh obviously, we're not
investing at the same level as some of
the American hyperscalers, but it is
still very uh uh very substantial.
>> Why don't you?
>> Oh, well, you know, sometimes you're
limited by uh the your your capital. Uh
you're limited by the free cash flow
that you're generating. Uh and the good
lucky thing is Alibaba is one of the
very few companies that actually has a
core business, which it is e-commerce.
We generate $25 billion of free cash
flow every year from our e-commerce
business that can fuel our investments
in AI. So, we're we're actually one of
the better positioned companies
uh out there.
>> I think today your your your your
business in in um
marketplace is still 80 85% of your of
your turnover.
>> Yeah, it it is still 80 plus percent of
our revenues in the e-commerce marketplace.
marketplace. Uh
Uh
uh we're very lucky that that
produces the cash flow that allows us to
make the future investment.
>> in AI and cloud business.
>> Yes, absolutely.
>> Uh what about your your Maurice
mentioned in the the the Qwen uh offer
and the Qwen model? What what what
because it's open source now, so so >> Yeah.
>> Yeah.
>> what what kind of customer and you you
can have and you can help with that?
>> Well, I thought Maurice was too
charitable in
crediting me to as the open behind the
open source movement. That that that's
totally untrue. Uh I would say that our
colleagues at Alibaba have worked last
several years in pushing uh the open
source movement in uh from these
frontier models and to to a high degree
of success. And we're continuing to do that.
that. Um
Um
what's the significance of open source?
So, I've been spending the last couple
of weeks in Europe. And as I talked to
European companies and CEOs and uh
scientists, people in Europe, one of the
biggest key words here is sovereignty.
Uh but what is sovereignty? If you ask
10 Europeans
about what sovereignty means, you'll get
12 different answers.
And um uh
uh
but to me, they mean basically two
things. One is technology independence.
Uh they they are all worried about the
kill switch. Uh that being relying on
some other countries' technology, uh
they could turn shut off the kill
switch. We just saw a very live example
of that in the recent days.
Yeah. That's
right. And the the second is data
privacy. People wanted to be able to use AI,
AI,
use technology
with data that's proprietary to them
within their own environment and hence
build up the the firewall to protect
their own data. Uh, I think open source
solves both problems because it is
basically a free piece of software that
you can download into your data center.
Uh, you can develop you can download the
Quen model in your own notebook
computer, for example.
Uh, and that that's completely
independent from uh, the original maker.
Uh, so if you
use our open source Quen open source
model, it will have nothing to do with
Alibaba. I mean, we have to figure out
how we charge for it, but we can't. Um,
so that's number one. That's independence.
independence.
What's important is you can take the
open source model and then you could
take your own data and train it further
train it, fine-tune it, do post-training
of the model. Uh,
and and keep all your entire data
private within your own firewalls. And I
think that's a really really important
point uh, for companies in Europe to
recognize that uh, open source is
actually one I'm not saying it's the
panacea. It's not the only approach.
It's one of the approaches to achieve
some degree of sovereignty. And uh,
today uh, the open source movement is
actually driven by Chinese companies. Uh,
Uh,
all the American players uh, have a
closed source uh, their their model. So
they want you to use
uh, their models through an API and you
have no idea where your data is going.
When you when you're chatting with the
uh, you know, a chatbot, uh, all of your
most private questions and your
confessions uh, go into some
uh, you know,
some pool where they use that to further
train their model. So, you have no idea
where that that's going.
>> But Troy, to be honest, we we you know,
Europe sovereignty is a very great
concern today and we I think we just
realized how dependent we can be from
the US or from China from the industry
for instance. So, um how I mean I I I
agree with the open market I mean the
the open model etc. but but still uh we
we we can be worried there is you know,
bypass for the Chinese company to maybe
to one day they want to cut the access
or to to be able to stop the the model
to function. How how can how can we
trust China as as we because we were
disappointed by the US in the last days
but but we could be also by China. I
mean it's it's a big risk for Europe. >> Yeah.
>> Yeah.
You can't.
That's the short answer because you
cannot be uh uh
uh relying on a a third party government
to say that they won't do something
that's detrimental to you. But here's
the thing, right now all of your eggs
are in one basket. Why not get a second
basket? Uh to put your eggs in two baskets
baskets
even though Europe at in in the long
term may uh develop their own basket,
but at least now you have two eggs uh
sorry, two baskets to put your eggs in. >> Yeah.
>> Yeah.
>> That's true.
>> May
uh maybe we can you you can give example
of how you work with the German company
like BMW. You you you you help them and
or Siemens in Germany. Uh what what was
the base of the collaboration and
cooperation you did with them?
>> Yeah. So, these German manufacturing
businesses are absolutely fascinating.
They're all clients of ours, Alibaba
Cloud in China uh in their Chinese
operations. Uh and we work with them in
in the manufacturing contest uh in terms
of design, uh, testing, quality control.
And, uh, uh, we think that, uh,
this is in the future is going to be a
very interesting segment because today
most of the application in AI, you know,
you have ChatGPT, that's consumer. You
have like Claude Co, that's, uh,
uh, focused on, uh, coding and the
knowledge worker space.
Uh, but in the future
uh, these manufacturing businesses are
very valuable because they will have
very valuable data that's proprietary to
them in the manufacturing process. And
that data is it is very, very good,
high-quality data that you can use to
train your own model uh, to improve your
manufacturing process. And this is the
approach that we're taking uh, with
these companies. Uh, you you also, uh,
you mentioned BMW, uh, Siemens. Uh, we
also have worked with Bosch. Last week I
was at the Bosch Connect World
Conference. Uh, we work with them
because they are, uh, using AI uh, to
develop their, uh,
assisted driving, autonomous driving.
And, uh, that requires a lot of compute.
Uh, uh, so,
so,
you know, uh,
there there's a lot of very interesting
going on in the manufacturing sector.
>> So, if I understand you you consider the
ban on, um, Anthropic last model by the
US an opportunity for you and your model
to be, uh, to be adopted by, uh, other
European customers?
>> Our model?
>> Yeah, so, your model, yeah.
>> Uh, yeah, well, so, there's two
approaches to it. Uh, one is, uh,
through, you know, they could just take
our open-source model and then, uh, they
will put that, deploy that into their
own infrastructure if they have their
own data center, whatever.
And, uh, uh, but our infrastructure is
developed hand, uh, sort of, you know,
hand hand with the model. So, we
actually have one of the most efficient
infra to help people train their models.
And uh so if they use our open source
model, they could also buy compute from
us, right? So that's a symbiotic very
symbiotic relationship between the model
and infra. Um
Um
So uh that's one approach. Another
approach is there are now emerging uh uh
a num- a number of uh
companies that uh develop uh these uh
inferencing platforms uh that offer
people a choice of models. Uh different
kind you don't have to use one, you
could use somebody else's. Uh they also
can access closed source models as long
as there's an agreement between the
model maker and the inferencing platform
to open up the weights uh the gates to
the weights uh
in a private context. Uh and then
customers can go on the go on to these
inferencing platforms to use the models.
>> I have a more difficult question about um
um
the your vision of future of AI LLM
balance between humans and and agents
uh and even in humanity. How do you see
the the the next 10 years of the humanity?
humanity? >> Uh
>> Uh
so today I was um
I had a a talk with uh the Alibaba Paris
office colleagues. Uh
Uh
it's located we just moved to a new
office. It's located in the I think the
second or third floor of a beautiful building.
building.
And I looked out the window, there's a cafe.
cafe.
And people are sitting
in the cafe
uh outdoors because the weather is
pretty nice having a great time.
And I point to them and I tell my
colleagues, this is the future of AI.
They may be you think they may be
drinking cat coffee and you know, having
a good time, not doing anything, not
being productive, but the reality is
uh they have deployed agents
that are doing the work. So, when you're
going to sleep, you still have agents
working for you.
So, think about the productivity gains.
If 24/7, you can actually have somebody
else work for you.
>> So, you have you have you have the same
philosophy that the the the people from
the Silicon Valley, you think that many
people won't work and we will make the
the agent and robot work for them?
>> Well, I I think it'll free definitely
free up people's time to do to enjoy
life, to enjoy their family, to do more
entertainment. This is why I'm very big
on live entertainment. I mean, when
people spend less time in the office,
where do they want to go? They don't
want to just sit at home. They want to
go to concerts, they want to go to
football matches, they want to go to
basketball games.
That's why
>> that's to French people because they
will they will want to work less. >> [laughter]
>> Well, a lot of them are focused on the
World Cup right now. So,
>> Chinese worker will will work a lot when
you when you when you look at the Chinese
Chinese
engineer, they they have lots of working
hours. Even with agent, even with AI. >> Uh
>> Uh
there will always be people that will
work a lot more than others, but I think
most of us
want to be able to enjoy life a little
bit, want want to be able to spend time
with our family more.
>> I think you are you are you are very
big a big fan of the basket Brooklyn
Nets and even the
Liberty New York supporter. I think you
are even support
a player I even don't know Lacrosse.
Uh and
what about soccer World Cup? Are you are
you enjoying the the the soccer?
>> Uh first of all, about basketball, I
went to the French League Championship
game last night between Paris and
Monaco. Uh
this is a second game of the five-game series.
series.
Uh and I thought it was very
interesting. And then I realized that uh
our women's basketball team, the New
York Liberty, have three French players.
Three players that play for the French
national team. And then we have on the
men's Brooklyn Nets have one French
player. So there's a lot of very big
French connection.
I think France is probably
the most important non-American
influence in the NBA and also in the
WNBA today. So it's very interesting.
So about the World Cup? I
I don't have a horse in this race.
That's the problem.
I think I just saw some social media
that says there's a Chinese referee in
the World Cup and he is getting
sponsorships. And I hope at some point
China will have a strong team, but I
think that development will take some
time. Yeah.
>> Thank you very much, Joey. Thank you.
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