Hi all, Alibaba just dropped big news regarding its rebranding of Tongyi to Qwen. Tencent earnings came out. I had some ideas I really wanted to share before the weekend.
[Ok, I first pushed my original analysis out Nov. 14, but it seems like people are catching up on my analysis of Alibaba’s big move into 2C, so I updated this piece on Nov. 17 with some snippets from LatePost’s interview with Alibaba directly and some coverage by 36kr.]
In the U.S., OpenAI’s ChatGPT has become synonymous with consumer artificial intelligence, with an estimated ~800 million monthly active users. People do not say, “I am going to use an LLM.” They say, “I am going to ask ChatGPT.”
In China, the world’s second-largest economy, that obvious consumer “seat” has yet to be crowned.
No single app has reached similar dominance. According to QuestMobile, Doubao is currently in first place with around 172 million MAUs, with DeepSeek’s app ranking second at about 145 million. Combined, they reach roughly 320 million people, which is about one-third of China’s internet users. For context, that is huge, but still nowhere near a ChatGPT-like, default position in people’s daily lives.
The thing is, DeepSeek only allocates a tiny fraction of its resources to consumers and does not actually care about reach. It is focused on training and infrastructure. Its consumer product lacks polish in its interface and has no real distribution rails of its own.
Tencent, on the other hand, has been the obvious winner in distribution with more than 1 billion users and an all-encapsulating app, but it has not had a true frontier model.
ByteDance is doubling down on models and has integrated Doubao into TikTok/Douyin, but at its core, it is still an entertainment-first business, not an operating system for daily life.
But hold on, now that Alibaba has properly stepped into the race with Qwen, my call is that 2026 will be the year of the 2C AI battle in China.
Big picture
China’s generative AI user base more than doubled to 515 million in the first half of 2025, according to the China Internet Network Information Center, representing about 36.5% of the country’s internet population. Yet this growth masks a key reality: unlike the U.S., where ChatGPT and Google’s Gemini have captured broad consumer mindshare, China’s market is split across enterprise tools, niche apps, and integrations inside existing ecosystems.
As we said, there has not been a clear 2C AI app that is an absolute dominant leader. ByteDance’s Doubao is hovering around 172 million MAU, while DeepSeek’s app is around 145 million MAU. For an economy with over one billion internet users, that is all a bit meh. No one has hit that exit-velocity number yet.
Actually, if you look at DAU numbers from QuestMobile, in October 2025, Doubao had about 54 million daily active users, DeepSeek had around 29 million, and Tencent’s Yuanbao had roughly 6 million. No one in China has stably broken through the 100 million DAU line, which is probably the minimum threshold for a true “national” AI app. So in the LatePost interview, Alibaba confidently said, “We are not late” — that is the backdrop. The consumer race is crowded, but no one has actually won it yet.
BAT: different superpowers
Tencent: think Apple, not Meta
Tencent’s original bet was simple. It did not have to own the best frontier model. It already owned the rails.
WeChat has more than a billion users. For people outside of China, WeChat is often lazily described as “like WhatsApp” or “like Instagram.” That framing is wrong. Tencent is not Meta. It is much closer to Apple.
WeChat is not just a chat app or social media. It is its own operating system. Inside WeChat, you chat, pay, shop, book doctor appointments, pay for your utility bills, call a ride, run your side business, and consume content. The real moat is not any single feature. It is the die-hard loyalty and habit. WeChat is where your life is anchored.
Historically, Tencent leaned on that distribution moat. Its own model, Hunyuan, exists, but it has not been seen as a top frontier model. (Though the next Hunyuan will see meaningful improvement, said mgmt today).
The thinking was that the distribution beats the model (or they just haven’t figured it out yet). You can always swap in a better model later or integrate someone else’s. Behind the search bar, the user does not really care which model is answering. They just type into WeChat.
This is where the Apple analogy helps. Apple is already working with external model providers to power Siri and Apple Intelligence on device. The brand and the OS remain Apple. The user does not think “now I am using someone else’s model.” They are just using Siri.
Tencent could easily end up in a similar position. It might not ship the absolute best model. What could be a win-win deal is that they could pay Minimax, Moonshot, DeepSeek, or others to sit inside the WeChat experience. And that could still be a very good outcome for Tencent.
The open question is whether that is enough in a world where Alibaba is now coming in with both a strong model and very powerful life touchpoints of its own.
This is also why Tencent looks a lot quieter than Alibaba on the AI infrastructure front. Capital markets would love to see another “China hyperscaler” story and just project Alibaba’s spending pattern onto Tencent, but the business reality is different.
Proven again in its recent earnings announcement. Tencent’s three core engines, social, games and ads, are still growing nicely and have pretty good visibility. AI is already seeping into every layer of those products, from content recommendation to ad targeting to game operations.
For Tencent, the current AI strategy is more about squeezing better performance out of every unit of compute and lowering deployment and inference cost, not about building the biggest, loudest GPU farm.
There is also a very practical scar-tissue example sitting right in front of them. Meta is another social giant that decided to go very hard into AI infra and now has to explain to investors why capex looks like a black hole.
Seems like Tencent does not want to wake up one day and realize it built a hyperscaler balance sheet for no good reason. So it stays more disciplined.
Alibaba: Qwen and “intelligence direct”
Up until now, Alibaba in the AI story looked a lot more like Amazon or Microsoft than like Tencent or ByteDance. It did not have a WeChat or Douyin-style national traffic firehose, so the instinct was to stand behind the scenes, buy cards, build data centers, and sell cloud plus AI to every industry.
Most of its AI progress showed up in the infra layer. It took stakes in several top Chinese model startups, cranked out its own Qwen family that quietly beat other open models on a bunch of benchmarks, and pushed Alibaba Cloud as the way to catch “AI for a thousand industries.” The consumer experiments felt more like side quests than the main plot.
Alibaba’s “ah ha” moment on the consumer side came when it decided to stop hiding its model behind enterprise branding and bring it straight to the front.
The company renamed its consumer-facing Tongyi app to Qwen today. In Chinese, Qwen is 千问, which literally means “a thousand questions.” The name is not an accident. It matches a pattern that Stratechery has written about in the West.
OpenAI’s consumer app is ChatGPT. The underlying models are GPT. Google’s models and consumer app line are called Gemini. You get the gist. You, as the user, feel like you are talking directly to the “intelligence,” not some generic assistant name that is separate from the model.
Alibaba is doing a version of that. It has been very vocal about how far its Qwen family of models has come and how it now believes it has one of the best, if not the best, domestic models. By putting that same brand on the consumer app, it is telling users: this app is the model. You are speaking to Qwen itself.
This pivot did not come out of nowhere. All year, Alibaba has been firing off big AI moves every few months. In February, right before its FY24 earnings, it pledged more than 380 billion RMB over three years to build cloud and AI hardware infrastructure.
In May, ahead of Q1 FY25, it officially launched the Qwen3 model family. In September, The Information reported that Alibaba was working on a new AI chip. Internally, by the summer of 2025, the debate shifted from “do we have the model and the infra” to “what is our consumer entry point.” Over the October-long holiday period in China, senior management basically decided: Alibaba must have a native AI super entrance on the C side, not just sprinkle AI across existing products.
People inside the Qwen team describe the timing as “just right” for two reasons. First, they think Qwen3-Max is finally at the global frontier level, so you are not trying to sell a half-baked brain to consumers. Second, the agent ecosystem, both inside Alibaba and in the wider developer world, is mature enough that the model can actually do things, not just chat. They have spent a lot of time just on data plumbing and authorization so that Qwen can safely call Taobao, Amap, Alipay and so on when needed.
What it is reminding us is that it is not just a cloud-plus model company. It has Taobao for commerce, Alipay for payments, Ele.me for food delivery, plus travel, local services, and entertainment. If it can wire all of that into the Qwen app and give users the feeling that “I can ask for something and it just gets done,” that is a different type of consumer proposition.
The analogy I like here is:
Imagine if Amazon had a leading frontier model and also owned Amazon.com, DoorDash, and PayPal at the same time.
In that world, you could just tell the Amazon AI app “I am hungry, I want Thai food.” The AI could search restaurants, decide which one is likely to please you, place the order, apply the right coupons and complete payment. All inside one app, backed by one identity and wallet.
Inside Alibaba the mantra is “one AI native super entrance on C, plus every old business gets AI-ified,” so Qwen is not replacing Quark or 1688. It sits on top of them and then gets embedded back into them again, like a loop.
That is what Alibaba is hinting at with Qwen. Instead of AI living off to the side as a cute chatbot, it becomes the orchestration layer across Taobao, Alipay, Ele.me, and whatever else they plug in.
If this works, then the consumer AI story in China becomes less about “who has the best standalone chat app” and more about “which super app has the most powerful, most trusted AI concierge behind it.”
Alibaba’s play now is to let users access commerce, food delivery, payments, ride-hailing, and entertainment, all powered by its own frontier model plus its proprietary business data. Watch out, Tencent.
For years, the narrative was that Tencent had the unbeatable social ecosystem. But Alibaba has its own ecosystem too, just anchored in commerce, logistics, and payments, and now it also has a very credible frontier model and a consumer brand to match.
ByteDance: model plus entertainment OS
ByteDance sits in a slightly different spot.
On paper, it has both pieces. It is doubling down on models, and it has entertainment distribution that is second to none. Doubao is already integrated into Douyin and other products. Users can use AI directly for chat, creative writing, and code, but also inside their content creation flows.
The reality today is that ByteDance is still an entertainment-first business. Douyin and TikTok own the mindshare for short video and discovery. The life touchpoints are narrower. You are not paying your utilities bill inside Douyin. You are not doing most of your boring daily errands there.
Where ByteDance shines is in multimodal and creative use cases. It has the best R&D capabilities for video AI in the world, with real user data and a giant ad machine sitting behind it. AI in the ByteDance world is there to help you create better videos, scroll smarter feeds, and buy things in a more entertaining way.
ByteDance can absolutely carve out the “AI plus entertainment and creator stack” slot, and that is still a huge opportunity. But I am just not sure that it will become the one app you go to for everything in the way WeChat or a future Qwen super app could.
Given that it is the only non-listed company out of the three, it is harder to get information on the company’s exact moves but I am working on a strategy update piece.
Why startups will not own the mass consumer slot
This brings us back to the independent AI startups.
Startups like DeepSeek, Minimax, Moonshot, and others are critical in pushing model quality, efficiency, and open-weight innovation. They are the reason the pricing for LLMs in China is already under pressure. They are also where a lot of the interesting research is coming from.
But when we talk specifically about the mass 2C slot, they all run into the same three bottlenecks:
Money. Training and serving top-tier models is insanely expensive.
Distribution. They do not own a super app, a cloud, or a payment network.
Expectations. DeepSeek has conditioned the market to expect strong models that are cheap or free.
So even if they ship very good consumer apps, they still have to buy traffic from WeChat, Douyin, Taobao, and the app stores. They are always, in some sense, tenants on someone else’s land.
This is why I think in the long run they are more likely to be model suppliers, infra providers, or owners of specific vertical agent products, rather than the “one icon on your home screen” that dominates consumer AI in China.
And that icon, again, probably lives inside Tencent, Alibaba or ByteDance.
2026: the OpenAI slot is still up for grabs
In the US, the consumer AI story already feels settled in people’s minds. OpenAI is the default app you think of when someone says “AI.” Even if the competitive landscape shifts in the long run, it already has the brand, the distribution, and the cultural reference point. It’s reached its exit velocity when it hit 500 million MAU.
China is not there yet. There is no single app that owns the consumer AI relationship in the same way. DeepSeek blew open the model conversation. Doubao, Yuanbao, and a bunch of other apps have hundreds of millions of users. Tencent and ByteDance are both embedding AI deeper into their ecosystems. But no one is yet the obvious first stop for “I have a question, let me ask [Insert name]” across the entire population.
That gap is what makes 2026 interesting. The “OpenAI slot” in China is still up for grabs. It might not belong to a pure model company at all. It might go to whoever wires a good enough model into the densest graph of daily life touchpoints, but I think it’s really now just a matter of whether that is WeChat, Qwen or Doubao.
One Alibaba exec put it more bluntly - If you define a real AI super app as something with over 100 million DAU, he said it will show up very soon in China. “Not 2025, then the first half of 2026.” In other words, the OpenAI slot is still empty, but not for long.
Go to AI PROEM BIG TECH for more on Alibaba, ByteDance, and Tencent. Toodaloo~
Thanks for your bird-eye survey of the AI landscape in 2025. I believe a smart and flexible integration of customer-driven AI-Killer-Apps (based on customer-centric experience and easy-to-setup configuration) should be pursued as the ultimate value proposition. The many different names of Chinese AI vendors should be re-positioned as complementary contributing Agentic AI platforms, working together collaboratively to serve the everyday needs of Individual Consumers and/or Connected Business Entities. Rather than “千問”, let us make it “萬答”. ~(Victor Cheung, Arcadia, California, USA）
Good article. ..but I didn't understand what you meant by 2C. That term was never introduced, as far as I could see.