Fear of "missing out".
Tencent has added a large model C-end application.
Not long ago, the "Tencent Yuanbao" App was launched, which means that Tencent has added C-end applications after the mixed yuan web and small programs. Compared with apps such as Wenxin Yiyan, Tongyi Qianwen, and Doubao, which were launched earlier, Tencent Yuanbao App does not occupy a first-mover advantage in terms of the number of users and downloads. According to the data, Wenxin Yiyan will be released from March 16, 2023, and the number of users will exceed 200 million by April 2024; From its launch in August 2023 to April 2024, Doubao has been downloaded nearly 9 million times on iOS.
At the current stage, the large model industry has entered another round of price war, and since May, many domestic large model manufacturers have announced price reduction strategies. Is the launch of Tencent ingots a bit late? In an interview with the media, Liu Yuhong, vice president of Tencent Cloud and head of the hybrid model, said, "Unless the product is mature, the penetration rate of the large model to C product is less than 1%, and the first-mover advantage is a bit insignificant.
Tencent's external statement on AI has never been too anxious. At the 2023 shareholders' meeting, Tencent CEO Ma Huateng mentioned that Internet companies have a lot of accumulation in the field of AI, and Tencent is also immersed in research and development, but it is not in a hurry to finish it early and show the semi-finished products. "I feel like a lot of companies are in a hurry right now, and it feels like it's to boost the stock price, and we've never been that style."
The internal self-developed large model is unhurried, but Tencent is frequently shooting externally. IT orange data shows that in 2023, Tencent will invest in 4 of the 5 AIGC and large model-related unicorns born in China, and the background of this high shooting rate is that the total number of investments by Tencent that year has reached the lowest point in the past decade.
A few days ago, it was reported that Tencent participated in the latest round of financing on the dark side of the moon, and it is worth noting that Ali has previously held nearly 40% of the shares in the dark side of the moon. If the news is true, it will be another encounter between Tencent and Alibaba in the field of large models, and it also shows that it is eager to make gains in the AI track as soon as possible.
Internet companies are pouring into the big model
Alibaba disclosed in its 2024 fiscal year that it will invest about US$800 million (about 5.9 billion yuan) in fiscal 2024 to buy about 36% of the dark side of the moon. After Alibaba's public investment in the dark side of the month, news came from the market that the latest round of financing on the dark side of the moon has been finalized, and new investors include Tencent, and the valuation of the dark side of the month after this round of financing has reached $3 billion.
As early as the darkness of Alibaba's confirmation of the investment month, there have been multiple versions of the list of investors in this round of financing. To a certain extent, this also reflects the layout of Internet giants in the field of large models, which has attracted great attention from the outside world. If the news of Tencent's investment in the dark side of the month is true, it will be the first time that Tencent has participated in the dark side of the month, and Tencent and Alibaba's investment projects in the field of AI will further overlap. Previously, both of them have invested in companies such as MiniMax, Baichuan Intelligence, and Zhipu AI.
The dark side of the moon that got financing is another dark horse in the field of domestic large models. According to the company's investigation, the dark side of the moon will complete the angel round and A round of financing in June 2023 and February 2024 respectively. In March 2024, Kimi, the main C-end product of the Dark Side of the Moon, will increase the length of lossless context to 2 million words. As a comparison, it was reported at the time that OpenAI's GPT-4.5 Turbo, which was not online, could process about 200,000 words at the same time. The longer text processing power than the new version of GPT has made Kimi quickly out of the circle. In addition to Alibaba, past investors in the dark side of the moon also include Internet companies such as Meituan and Xiaohongshu.
Not only the dark side of the moon, but there are several Internet companies standing behind the current large-scale model unicorns\start-ups, such as Shengshu Technology, which has received investment from Ant Group and Baidu. Among the major Internet companies, there are the most large-scale unicorns invested by Alibaba and Tencent. Another consideration for whether Internet giants choose to invest in large models is cloud computing. Wang Jian, the founder of Alibaba Cloud, once described the relationship between cloud computing and GPT as the relationship between electricity and electric motors. "Globally, electric motors consume about 50 percent of the electricity. Imagine that in the future, the computing power of cloud computing will be consumed by the 'motors' of these intelligent eras. ”
In terms of cooperation, in addition to throwing real money at large-scale model enterprises, major Internet companies will pay part of the investment with computing power. Under this model, large-scale model enterprises obtain computing power, and large Internet companies obtain income. Overseas, Microsoft's investment in OpenAI and Amazon's investment in Anthropic have been completed in the form of providing computing power. In terms of investment in MiniMax, Tencent Cloud has also built a cloud architecture for MiniMax from the resource layer, data layer to the business layer.
There are ready-made examples of large models driving revenue for cloud vendors. In early 2023, Microsoft announced the addition of ChatGPT to its Azure cloud service. In October of that year, Microsoft CEO Satya Nadella noted that many AI startups were using OpenAI to power their AI solutions, so they were also becoming Azure customers. In the third quarter of fiscal 2024, Microsoft's intelligent cloud segment's server products and cloud services revenue increased 24% year-over-year, mainly driven by a 31% year-over-year increase in Azure and other cloud services revenue.
Focusing on the domestic cloud service market, Robin Li, chairman and CEO of Baidu, revealed that the total revenue of Baidu Intelligent Cloud in the fourth quarter of 2023 will be 8.4 billion yuan, of which the large model will bring about 660 million yuan of incremental revenue to the cloud business.
Specific to Tencent, it also needs to find new growth points and open up the gap with its opponents. As data center service providers and industry leaders such as HUAWEI CLOUD, China Telecom, and China Mobile have strengthened their computing power layout, Tencent Cloud's market share has been squeezed. According to the "China Public Cloud Service Market (Second Half of 2023) Tracker" report released by IDC, in the IaaS market in the second half of 2023, Tencent Cloud ranked fourth, with a market share of 8.7%, followed by China Mobile with a market share of 8.6%; The top three positions are occupied by Alibaba (27.1%), Huawei (13.5%), and China Telecom (12.9%).
The overlap between Tencent and Alibaba's investment in large-scale model projects also reflects the anxiety that is spreading in the artificial intelligence industry. At present, there is still a gap between the strength of domestic manufacturers and ChatGPT, and there is no gap with other players.
Focus on old projects and medical tracks
Judging from Tencent's investment projects this year, in addition to artificial intelligence, it is more inclined to the medical track. From the beginning of 2024 to June, Tencent has made a total of 11 external sales, including 4 cases involving medical and health care.
These four companies are Tencent's first investment projects, and the largest financing amount disclosed is the 700 million yuan E round of financing of "Sinovi", which was led by Tencent Investment and Guoxin Investment, followed by Jinan Industrial Development, Huakong Investment, Yuekai Capital, Chenhai Capital, Pudong Venture Capital, Zhuopu Capital, etc., and the old shareholder Zhengxin Valley continued to support.
According to the official website, Sinovi was established in 2017 and is a platform-based innovative drug company, with a pipeline of innovative drugs covering oncology, anti-infection, metabolism and other diseases. At present, the company has 9 products in the clinical research and development stage at home and abroad, and two of them have entered clinical phase III. Sinovi has reached a number of external licensing cooperation with domestic and foreign companies, with a total amount of billions of dollars.
Healthcare is an area that Tencent has been deploying for many years. Before 2018, Tencent mainly invested in Internet medical companies, preferring early-stage projects, and continued to bet on them. For example, it invested in Water Drop Mutual Aid in the angel round, invested in Sipai Health in the B round, and successively invested in Lilac Garden in 2014 and 2020. Later, Tencent shifted to investing in biotechnology and medical technology.
IT orange shows that in 2023, Tencent will also make many moves in the medical field, investing in 5 related companies: CMRSurgica, a surgical robot developer, RemedialHealth, a pharmaceutical supply chain service provider, "Ningdan New Drug", a new drug developer for central nervous system diseases, "Saihe Medical", a vascular implant interventional medical device, and "Shengyin Biotechnology", a nucleic acid drug research and development company.
In Tencent's traditional tracks such as games, it mainly focuses on chasing old projects. Since the beginning of this year (as of June), Tencent has invested in two game companies, Remedy Entertainment and NetElement Shengtang, as well as Weimob, an advertising and marketing company, which have all invested in before.
In addition, the projects that can receive Tencent's first investment are either from a deep company background or are in a hot track. In its 2023 financial report, Tencent mentioned that the main objective of the group's managed portfolio is to strengthen its leading position in core businesses and complement its "connectivity" strategy in different industries, particularly social and digital content, retail and fintech.
According to Reuters, GMM Music, a well-known entertainment company in Thailand, recently announced that it has reached a strategic cooperation with Tencent and Tencent Music Entertainment (TME). Tencent and Tencent Music will acquire a 10% stake in GMM Music for $70 million, an investment that values GMM Music at $700 million. Founded in 1983, GMM Music is a music and record label owned by GMM Grammy, Thailand's largest entertainment group. The company was spun off from parent company GMM Grammy a year ago and is still in progress.
Tencent also participated in the Series A financing round of ESG service provider Menglang for the first time. It is understood that Menglang takes "consulting" as the starting point and provides ESG/dual carbon management consulting for leading listed companies in the service industry. In 2023, international organizations and regulators in various countries have stepped up their supervision of corporate sustainability reporting disclosure, and promoted enterprises to assume the responsibility of sustainable development on a global scale by improving the regulatory framework and strengthening regulatory measures.
Throw away the "hot potato" and cool down foreign investment
Although both new and old tracks are involved, on the whole, Tencent is becoming more and more cautious in its external efforts. According to IT orange data, the number of Tencent's outbound investment incidents will further drop to 37 in 2023, a year-on-year decrease of 60%, which is the lowest point of Tencent's outbound investment in the past decade.
The watershed of Tencent's outbound investment was in 2021, with the number of outbound sales reaching a high of 296. However, in the same year, Tencent significantly reduced its stake in JD.com, which sparked heated discussions. Tencent Holdings announced that it will distribute about 457 million Class A ordinary shares of JD.com to eligible shareholders in the form of interim dividends. After this dividend, Tencent's shareholding in JD.com will be reduced from 17% to 2.3%, and it will no longer be the largest shareholder.
As for the reasons for the reduction, Tencent said in the announcement that one of the investment strategies is to invest in companies in the development stage (investment companies can benefit from long-term capital to fund their development and expansion); support and share in the growth of investment companies; and exit the investment at an appropriate time when the investment company can raise its own funds for its future plans. In the eyes of the outside world, Tencent's reduction of JD.com is also its proactive response to the anti-monopoly trend.
2021 is considered to be a year of structural turning points for the Internet industry. The regulator's anti-monopoly supervision measures for the Internet industry have continued to be strengthened, and Internet companies such as Alibaba, Meituan, and Tencent have been punished by anti-monopoly one after another. At the Central Economic Work Conference held in 2021, anti-monopoly and anti-unfair competition were mentioned again. At the same time, it is also emphasized that it is necessary to set up "traffic lights" for capital, strengthen effective supervision and control of capital in accordance with the law, and prevent the barbaric growth of capital.
With its strong financial capabilities, Tencent has invested in a number of Internet companies in the past, including Meituan, Didi, Pinduoduo, JD.com, Kuaishou, etc., and it has also obtained a lot of investment returns, but under the strengthening of Internet anti-monopoly measures, the former "sweet pastry" may also become a "hot potato".
Shortly after the reduction of JD.com, in early 2022, Tencent announced that it would reduce its Class A stake in Sea Limited (hereinafter referred to as "Sea"), a "small Tencent in Southeast Asia", reducing Tencent's stake in Sea from 21.3% to 18.7%. At the time of market capitalization, the 2.6% stake in Sea was worth approximately $3.2 billion. Commenting on the sale, Tencent said: "Partial value of the Sea investment has been realized, and its global business has grown and expanded significantly. The divestment provides Tencent with funding for other investments and social projects. ”
Another background to the large cash-out is that Tencent is going through a period of performance pain. In the first two quarters of 2022, Tencent's net profit declined year-on-year. Revenue declined for the first time in the second quarter, the first year-on-year decline in quarterly revenue in Tencent's history. In the face of declining performance, Tencent took the initiative to reduce expenses, and when talking about "reducing costs and increasing efficiency", Ma Huateng once said, "In the future, we will continue to focus on the core business, rather than doing everything and everything, which is very difficult." ”
The two successive reductions are also seen as a shift in Tencent's investment style. In March 2022, Tencent executives said that 80% of the companies invested by Tencent are unlisted companies, but 50% of the investment returns are contributed by listed companies. This shows that Tencent's investment has accompanied many companies far until they go public, and only by selling some of the shares of listed companies can Tencent continue to invest in those high-quality unlisted companies.
After the successive sale of shares in two listed companies, Tencent's foreign investment has also cooled. In 2022, the number of outbound investment cases decreased to 95 compared with the previous year. In 2023, the number of new projects dropped further to 37, of which 57% were new projects invested for the first time, down from 77% in 2022.
At present, artificial intelligence has become the hottest track, and Tencent Investment is also closely following the large-scale model unicorn, and it is worth looking forward to how to lay out the follow-up.