(Yicai) May 20 -- Alibaba Group Holdings, the Chinese internet giant investing billions in artificial intelligence, has dissolved the team responsible for Miaoya Camera, widely regarded as China's first popular AI-generated content app, according to an insider, amid shifting corporate priorities and intensifying competition in the Chinese AI app market.

The Miaoya team, part of Alibaba's entertainment and content arm Hujing Digital Media & Entertainment Group, was constantly changing with frequent organizational restructuring over the past year, the source told Yicai. Internal strategic adjustments and shifts in external competition have affected Miaoya Camera's development, the person added.

According to reports, Miaoya is operating on a low-cost basis, with no further product upgrades or promotions. Hujing Digital has not yet replied to Yicai's request for comment. 

Launched in July 2023, Miaoya allows users to upload multiple photos to create a digital avatar and generate portraits using built-in templates. It used to charge CNY9.90 (USD1.45) for each digital avatar, and garnered 600,000 daily active users to top the App Store rankings in the August of that year.

"It had a first-mover advantage, but later it could no longer reap the dividends of model upgrades," the insider pointed out. “After ByteDance's products gained in popularity, Miaoya lost its edge.”

Miaoya utilized Tiziano, an AI model developed by Hujing Digital. Although the Damo Academy, Alibaba's research and development institute, already had the Tongyi Qianwen AI model family at the time, they were not applied to Miaoya.

Miaoya's technological edge was hard to sustain in the rapidly evolving AI landscape, and its innovations were often short-lived. In addition, ByteDance's Douyin, Meitu, and others launched AI camera tools, with Douyin -- the Chinese sister app to TikTok -- holding the advantage in traffic and social networking, and its image-model capabilities kept improving.

Miaoya has already completed its historical mission, Zhang Shule, an internet industry analyst, said to Yicai. At a time when text-to-video content can be indistinguishable from reality, Alibaba and its video platform Youku need to scale back and provide a truly impressive platform for their AI, Zhang noted, adding that the app's simplistic functionality keeps users from delving deeper.

In Zhang’s view, AI camera tools are rapidly growing in popularity, but have not truly matured, with computing power bottlenecks meaning that users mostly just try them out rather than stick with them. Alibaba's AI focus is on serving e-commerce, or enabling AI shopping, he said, while teams develop one or two breakout AI agents, serving as a standard for encouragement and trial and error.

Editor: Martin Kadiev