Alibaba and Moonshot offer free AI; here’s how they plan to make money

Chinese AI companies are increasingly offering powerful models for free, hoping to attract more users, developers, and businesses while competing with their US rivals. It sounds like a great deal, right? But there is a catch: developing and maintaining these models requires money—and a lot of it. Now, Chinese AI companies face the same problem as their US counterparts: how to turn all those users into actual revenue? Alibaba, one of China’s largest AI companies and the creator of Qwen, is reportedly considering asking large companies that use its upcoming Qwen model to share a portion of the profits generated thanks to it.

According to a famous publication, citing two people familiar with the company’s plans, the creators of Qwen are exploring a new avenue to monetise their open-source AI models. Alibaba may ask large commercial users to share a portion of the revenue generated by these models, although specific terms and fees are still under negotiation.

Until now, Alibaba has largely allowed customers to download and run its models in their own data centres without paying the company. It does charge developers when they use its models Cloud. However, as more companies use Qwen to build their own products and services, Alibaba is reportedly looking for ways to benefit from that commercial success as well.

Alibaba is not the first company to pursue a revenue-sharing model

News that Alibaba is considering a revenue-sharing model comes just as the company is expected to launch Qwen3.8-Max next week. It is an open-source, open-weights model, meaning developers can download its weights—the parameters that allow the AI to generate responses—and run or adapt it on their own. This gives developers greater control over the model’s usage compared to leading models from US companies like OpenAI, Anthropic, and Google, which are largely closed and accessed companies’ own services. However, maintaining an open-source model does not require the company to provide every use case for free; it can still charge businesses for commercial use, support, or other services based on the model.

It is worth noting that the idea of claiming a share of revenue is not entirely new in China. Alibaba’s planned approach follows a strategy similar to that of the AI startup Moonshot AI, the company behind Kimi K3.

Moonshot’s license for Kimi K3 stipulates that companies commercializing the model as a service and generating over $20 million in annual sales must enter into a separate commercial agreement with the company. According to the report, Alibaba is considering a similar condition for Qwen3.8-Max.

Chinese AI models also compete on price

Price is another key factor in the competition between China and the United States. Chinese AI companies offer models at much lower prices than some of their US rivals. For example, the Kimi K3 model costs approximately one-third of Anthropic’s Fable model, based on published rates for input and output tokens.

While low costs benefit companies using these models—allowing them to develop AI products and services more cheaply—this also presents a challenge for the AI companies themselves. If they charge less for access, they require a much larger user base, or an alternative revenue stream, to cover the massive costs of developing and operating these models. Consequently, companies like Alibaba and Moonshot are seeking ways to boost profitability from business users while keeping their models open and relatively affordable to access.