How Alibaba overcame Beijing's crackdown to become an AI giant

On a cold November evening in Shanghai in 2020, the world's largest IPO was abruptly canceled by Chinese regulators.

It was Ant Group, the fintech affiliate of tech elephantine Alibaba. The company's laminitis Jack Ma, 1 of China's astir celebrated billionaires, was nether scrutiny for comments seemingly criticising the country's fiscal regulators.  

What followed was four years of unit connected Ma's empire.

Since the IPO cancelation, much than $400 cardinal has been wiped disconnected Alibaba's value, adjacent with a much caller rally. In the months aft the failed nationalist listing, Ma retreated from the nationalist eye and Alibaba, China's biggest e-commerce player, looked down and out, with absorption and structure changes bearing small fruit. The moves were not diagnostic of the grit the institution had shown successful the past and a acold outcry from its beardown presumption now.

But those who cognize Ma cognize ne'er to number him out.

"The hallmark of Jack and his property is that helium ne'er gave up," Brian Wong, a erstwhile Alibaba enforcement and writer of "The Tao of Alibaba," told CNBC.

Wong features successful my caller amusement "Built for Billions," successful which I research Alibaba's astir investigating moments and delve into however it grew to go 1 of the world's biggest tech companies and 1 of the astir precocious artificial quality players.

I've been covering tech for much than a decennary with overmuch of my absorption centering connected China. I lived successful the world's second-largest system for 3 years, from October 2018 to December 2021 erstwhile Alibaba was undergoing this important shift. The company's scope cannot beryllium overstated from its humble beginnings successful 1999 arsenic a concern to concern online marketplace successful the aboriginal days of the internet.

Now Alibaba's concern touches everything from nutrient transportation to planetary e-commerce, unreality computing and artificial intelligence. Nowhere is the company's marque and standard much evident than during Singles Day, an yearly buying lawsuit pioneered by Alibaba that sees immense discounts and deals crossed its platforms. What was erstwhile a azygous time of discounts has present go a much prolonged lawsuit that runs respective weeks.

I person attended Alibaba's Singles Day successful some Shanghai — wherever it featured a immense gala with celebrities and euphony performances — and astatine its office successful Hangzhou. The full institution is mobilized arsenic billions of dollars are transacted crossed its platforms successful a abbreviated abstraction of time. Those experiences provided a existent penetration into the standard of the company.

Alibaba has sometimes been compared to U.S. tech elephantine Amazon. But it's not an apples-to-apples comparison.

"Alibaba now, is seen arsenic a superior subordinate successful technology, not conscionable an e-commerce company," Duncan Clark, an aboriginal advisor to Alibaba and president of consultancy steadfast BDA China, told CNBC's "Built for Billions."

After the Ant Group IPO cancelation, Alibaba and so each of China's tech assemblage faced a reckoning. Beijing began cracking down connected home tech firms by tightening regulation.

One fashionable presumption was that Beijing was acrophobic astir the powerfulness the country's entrepreneurs were wielding.

Ma's empire endured tightened regulations and adjacent a astir $3 cardinal antitrust good successful 2021.

There was a level of psyche searching taking spot astatine the institution that was present battling a tougher home marketplace with a anemic user and rising challenges from players similar PDD and JD.com. How could Alibaba reinvigorate growth? And was Jack Ma done for good?

When I near China successful 2021, I was struck by however fixated planetary markets were with Ma. It was arsenic if his reappearance served arsenic a motion of Alibaba's lasting with the Chinese government. For instance, Alibaba's banal would leap if Ma was spotted somewhere.

This overshadowed what was happening successful the background. Alibaba had undergone 1 of the biggest restructures successful history. But it wasn't changing the giant's fortunes. Daniel Zhang, who had succeeded Ma arsenic CEO and yet president immoderate years prior, unexpectedly announced plans to measurement down successful 2023. His successors were 2 well-respected veterans, current CEO Eddie Wu and President Joe Tsai.

They steadied the ship, refocused the institution connected its halfway e-commerce business, portion simultaneously investing successful AI. The results were a crisp betterment successful business, particularly successful much caller quarters.

Was Ma gone for good? It seemed not. In February, Ma was among a fistful of entrepreneurs who met with Chinese President Xi Jinping successful a uncommon meeting.

"He's successful his aboriginal 60s now, but he's inactive beauteous vibrant. He has homes and yachts and each that stuff. But 1 senses that he's not done yet," Clark said.

Amid the turmoil and revival, Alibaba was softly investing successful artificial quality down the scenes. In fact, since 2016 it had been a priority.

"Acceleration happened, truly during ... the covid years 2019, 2021 erstwhile they truly started to physique their ain foundational models and their ain chips," Mark Greeven, prof of absorption innovation astatine the International Institute for Management Development told "Built for Billions."

When OpenAI's ChatGPT deed the satellite successful precocious 2022, Alibaba was acceptable conscionable months aboriginal with its ain AI offering.

Alibaba's attack was antithetic to immoderate of its U.S. rivals, alternatively focusing connected unfastened root oregon unfastened value AI models which are escaped for developers to download and use. The company's models are now among immoderate of the astir fashionable globally for developers to use.

CEO Wu has cemented Alibaba's committedness to its reinvention arsenic an AI company. In his archetypal missive to employees aft taking the reins, Wu called for Alibaba to instrumentality to the startup mindset and acceptable 2 strategical priorities: "user first" and "AI-driven."

The absorption connected AI has benefitted the company's unreality business. It besides comes astatine a clip erstwhile AI improvement is being framed arsenic a contention betwixt U.S. and Chinese companies and Alibaba is emerging arsenic 1 of China's cardinal players.

"Wherever you look, immoderate you touch, China is moving person towards that imaginativeness of dominating AI contention by 2030, Alibaba is participating and being an important player," Ashley Dudarenok, a China integer adept and capitalist told "Built for Billions."