Alibaba's AI Video Model Rises to No. 2 in Global Rankings in 2026

40% of Alibaba Cloud customers are adopting HappyHorse 1.1, the company's latest AI video generation model, which has risen to No. 2 in global rankings, surpassing OpenAI's Sora and ByteDance's Seedance.

Introduction to HappyHorse 1.1

Alibaba Cloud's HappyHorse 1.1 is a major upgrade to its AI video generation model, delivering production-ready video synthesis across core content creation scenarios. The model is now live on Alibaba Cloud Model Studio with full API access for enterprise customers and developers. This release comes at a time when the AI video generation market is experiencing significant upheaval, with OpenAI discontinuing Sora due to financial unsustainability and ByteDance shelving the international rollout of Seedance 2.0 following copyright complaints from Hollywood studios.

Market Impact

The AI video generation market is projected to reach $13.4 billion by 2028, growing at a compound annual growth rate (CAGR) of 34.6% from 2026 to 2028. Alibaba's HappyHorse 1.1 is well-positioned to capitalize on this trend, with 25% of Fortune 500 companies already using Alibaba Cloud services. In contrast, OpenAI's Sora had only 5% market share before its discontinuation.

According to a report by VentureBeat, Alibaba Cloud's HappyHorse 1.1 has the potential to disrupt the AI video generation market, particularly in the Asia-Pacific region, where 60% of the market share is dominated by local players.

What the Sceptics Say

Some critics argue that Alibaba's HappyHorse 1.1 may not be able to sustain its current growth rate, citing concerns over copyright infringement and data privacy. Additionally, the model's 40% discount for the first two weeks may not be enough to attract new customers, particularly in a market where 70% of customers prioritize cost over features.

What This Means for the Industry

Alibaba's rise to No. 2 in global rankings is expected to have significant implications for the industry. Companies like Google and Amazon may need to reassess their AI video generation strategies, particularly in light of China's new rules on humanlike AI interaction services, which are set to take effect on July 15, 2026. Additionally, the discontinuation of OpenAI's Sora and ByteDance's Seedance 2.0 may lead to a consolidation of the market, with top players emerging as the dominant forces.

Key Takeaways

1. Engineers: Focus on developing AI video generation models that prioritize copyright compliance and data privacy to avoid potential legal issues.
2. Investors: Consider investing in companies that are developing AI video generation models with a strong focus on Asia-Pacific markets, where local players dominate the market share.
3. Business Leaders: Assess the potential of AI video generation models for content creation and marketing strategies, and consider partnering with companies like Alibaba Cloud to leverage their expertise.
4. Consumers: Be aware of the potential copyright infringement and data privacy risks associated with AI video generation models, and choose services that prioritize these concerns.

Sources

• VentureBeat: Alibaba's AI video model rises to No. 2 in global rankings, as OpenAI's Sora and ByteDance's Seedance fall away
• The Next Web: ByteDance and Alibaba kill custom AI companions as China’s new rules bite
• SiliconANGLE: OpenAI offers feds a stake, Anthropic gets out of AI model jail and Meta wants to be a neocloud
• TechNode: ByteDance’s Doubao and Alibaba’s Qwen to shut down AI agent features on July 15