Alibaba unveils ChatGPT rival amid growing regulator concern

Alibaba revealed Tongyi Qianwen, its ChatGPT rival AI product, on Tuesday at the 2023 Alibaba Cloud Summit, joining the race for AI dominance with Baidu and global tech giants. As development in the field accelerates, China drafts new generative AI regulations. How will increasing global concern over AI risks shape the landscape?

- Alibaba Cloud introduced Tongyi Qianwen, a ChatGPT rival AI product, on Tuesday, with plans to integrate it into various company products, including DingTalk and Tmall Genie.

- Chinese regulators released draft guidelines to control generative AI models, aiming to maintain content boundaries and prevent discrimination.

- China's new AI regulations emerge amid a surge in stock prices for Chinese tech firms and growing concerns over generative AI development worldwide.

Alibaba announces ChatGPT rival

During Tuesday’s 2023 Alibaba Cloud Summit, Alibaba Cloud, an offshoot of the Chinese technology powerhouse Alibaba [BABA], introduced its very own ChatGPT contender, Tongyi Qianwen. The advanced AI model, capable of comprehending both Chinese and English, will initially be incorporated into Alibaba's workplace communication platform, DingTalk, as well as the smart home appliance provider, Tmall Genie.

Tongyi Qianwen, which translates to "truth from a thousand questions," will offer capabilities such as summarising meetings, drafting emails, and providing shopping tips. The AI model is set to be integrated into Alibaba's existing applications, including workplace messaging and voice assistants, with plans to roll it out across all the company's products in the near future.

Alibaba's announcement comes on the heels of Baidu's [BIDU] unveiling of similar technology last month and the recent product launch by SenseTime Group [0020.HK]. These corporations, together with international tech behemoths like Alphabet’s Google [GOOG] and Microsoft [MSFT], are contributing to the burgeoning development of generative AI, which can produce original content based on simple user inputs.

Following the announcement, Alibaba's shares listed in Hong Kong surged by over 3% but subsequently retraced some of the gains. In contrast, Baidu's shares in Hong Kong experienced a 6% decline.

Chinese regulators draft new rules for AI chatbots

As local technology giants begin introducing ChatGPT-style products, the Cyberspace Administration of China (CAC) has issued draft guidelines aimed at regulating generative AI models. These proposed rules would mandate that companies submit their products for security evaluations prior to public release, create a database for registering AI models, and authenticate users' identities for monitoring purposes.

These first-of-their-kind draft guidelines in China specify the content boundaries for generative AI services. According to the rules, generated content must adhere to core socialist values and refrain from undermining state authority, inciting division within the country, or compromising national unity.

Furthermore, the CAC obliges companies to guarantee that their AI models do not discriminate on the grounds of ethnicity, race, or gender and refrain from producing false information.

This regulatory clampdown coincides with generative AI announcements bolstering Chinese tech firms' stock prices. Baidu's shares have increased more than 15% since the beginning of the year, while SenseTime's shares have soared nearly 50%. However, Chinese regulators and state media have warned investors about the speculative mania surrounding AI stocks.

China is not alone in its concerns over generative AI development; Italy banned ChatGPT in March, citing privacy issues.

Funds in focus: WisdomTree Artificial Intelligence UCITS ETF

The First Trust Indxx Innovative Transaction & Process ETF [BLOK] includes Alibaba among its top three holdings, with a 1.52% weighting. Intel [INTC] and Nvidia [NVDA] are the other largest holdings, with weightings of 1.54% and 1.47% respectively. The fund is up 24.9% in the last six months, as of market close on 11 April, according to data by Morningstar.

The Artificial intelligence (AI) theme is up 22.9%, according to Opto data. The WisdomTree Artificial Intelligence UCITS ETF [WTAI] offers concentrated exposures to key innovators in the AI space, with its top holdings including BlackBerry [BB], Illumina [ILMN] and UiPath [PATH]. The fund is up 29.9% in the last six months, as of market close on 11 April, according to data from Morningstar.

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