Happy Thursday! Days after DeepSeek rattled the world, Alibaba enters the AI race with its new and low-cost Qwen 2.5 model. This and more in today’s ETtech Morning Dispatch.

Also in the letter:
■ BrowserStack’s US win
■ ETtech Done Deals
■ Blow to Good Glamm

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AI meets jugaad as Alibaba’s Qwen 2.5 pips DeepSeek in model battle

As the world adjusted to Chinese upstart DeepSeek’s low-cost artificial intelligence (AI) large language models (LLMs), the country’s technology flagbearer Alibaba dropped one of its own: Qwen 2.5-Max.

Driving the news: The Max is an upgrade on the Qwen 2.5 open-source AI model it released last year. Alibaba claims it outperforms rival models, including OpenAI’s GPT-4o, DeepSeek’s V3, and Meta’s Llama 3.1-405B “almost across the board.”

Hurry: This is Alibaba’s second Qwen model launch this week. On Monday, it introduced the Qwen 2.5-VL, a family of AI models that performs a range of text and video analysis tasks. Last week, TikTok parent ByteDance made similar claims while releasing its Doubao 1.5 model.

In rapid succession, all these models have optimised costs while enhancing efficiency, sparking an AI frenzy in the country leading up to the Lunar New Year.

New approach:

Also Read: ETtech Explainer: The story behind DeepSeek’s greener and leaner chatbot

Government concern: The Indian government is closely monitoring DeepSeek’s AI model due to its growing popularity. Given the company's Chinese origins, this has raised concerns over data security and sovereignty. “There is nothing alarming as of now, but if there is an issue around data transfer, we will take action as we did in the past,” a senior government official told us.

Also: OpenAI's CEO Sam Altman is scheduled to visit India next week. This will be Altman’s second visit, the first occurring in 2023. The trip comes as OpenAI faces increasing legal challenges in the country, with multiple lawsuits alleging copyright violations.

Also Read: DeepSeek's fast rise sparks debate on Indian AI models

Around the globe: US officials said on Tuesday that they were investigating DeepSeek models for potential national security red flags. Australia has urged its citizens to be cautious when using the app, and Italy’s data protection authority has also raised questions about personal data.

Also Read: ETtech Explainer: What is DeepSeek, China's competitor to OpenAI?

Under the scanner:

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Mumbai, Hyderabad lead the charge for data centre investments: Analysts

Mumbai and Hyderabad are emerging as leading data centre investment hubs in India, fueled by the country’s AI-driven expansion. Chennai and Delhi-NCR continue to be vital markets.

Driving the news: Analysts cited infrastructure, connectivity, power, talent, and government support as factors favouring Mumbai and Hyderabad.

The big deals:

By the numbers: According to a report by commercial real estate consultancy Cushman and Wakefield, India will triple its installed capacity by 2028, reaching an IT load of 3.29 MW.

• Hyderabad is expected to soon break into that list following investments and under-construction projects.

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Other Top Stories By Our Reporters

Ritesh Arora, CEO, BrowserStack

US court dismisses Deque Systems’ claim of IP theft against BrowserStack: A US district court judge ruled in favour of the Accel-backed mobile and web software testing platform BrowserStack in an IP theft case brought against it by its rival firm Deque Systems.

Leap raises $65 million in funding round led by Apis Partners: Edtech platform Leap has secured $65 million in a funding round led by London-based private equity fund Apis Partners. Existing investors Owl Ventures, Jungle Ventures, and Peak XV Partners also participated in the round.

SaaS startup Atomicwork raises $25 million: Software-as-a-service (SaaS) startup Atomicwork has raised $25 million in a funding round led by Silicon Valley-based Khosla Ventures and Z47 (formerly Matrix Partners India).

Footwear startup CHK raises $2.5 million from Accel, Bluestone, others: DealShare cofounder Sankar Bora’s direct-to-consumer (D2C) footwear startup CHK has raised $2.5 million from investment firm Accel, jewellery retailer Bluestone, and some individual investors.

Accel, Prosus, and Bessemer directors quit Good Glamm board amid cash crunch: In a major setback for the struggling beauty and personal care startup Good Glamm Group, board members from Accel, Prosus Ventures, and Bessemer Venture Partners have stepped down.

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Global Picks We Are Reading

■ Elon Musk lackeys have taken over the office of personnel management (Wired)

■ High-Flyer, the AI quant fund behind China's DeepSeek (Reuters)

■ To seize AI’s benefits, ministers must be prepared to fail in public (FT)